AHINSA JEWELLERY MFG.CO.P.LTD, MUMBAI V. INCOME TAX OFFICER-5(1)(1), MUMBAI

ITA 4960/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0366 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 18-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Reopening of assessment; Bogus purchase; Search and seizure; Tangible material; Accommodation entries; Reason to believe
• Section: 143(3); 142(1); 133(6); 147; 148; 139

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 4960/MUM/2017 ( / ASSESSMENT YEAR: 2012 - 13 ) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. 54, MANI BHUVAN, HUGHES ROAD, OPP. DHARAM PLACE, OPERA HOUSE, MUMBAI - 400 007 / VS. INCOME - TAX OFFICER - 5(1)(1), 5 TH FLOOR, AYAKKAR BHAVAN, M. K. ROAD, MUMBAI ./ ./ PA N/GIR NO. AAICA 3320 J ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI PIYUSH CHHAJED / RESPONDENT BY : MS. N. HEMALATHA / DATE OF HEARING : 14.11.2017 / DATE OF PRONOUNCEMENT : 05.02 .2018 / O R D E R PER SHAMIM YAHYA , A. M.: THIS A PPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS) - 10, MUMBAI DATED 12.05.2017 AND PERTAINS TO THE ASSESSMENT Y EAR 2012 - 13. 2 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO 2. THE ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADHOC DISALLOWANCE BEING 12.5% OF THE PURCHASES FROM CERTAIN PARTIES PURPORTED TO BE PART OF SHRI BHANWARLAL JAIN GROUP. 3. IN THIS CASE, THE ASSESSMENT WAS REOPENED, INFORMATION RECEIVED FROM DIT, MUMBAI THAT THE ASSESSEE WAS INVOLVED IN BOGUS TRANSACTION BETWEEN HAWALA AND BENEFICIERS. THE REASON FOR REOPENING THE RECORD READ AS UNDER: THE DIT (INV) - II, MUMBAI VIDE LETTER NO. DIT(INV) - II/INFOR MATION/BLJ/LDV.2014 - 15/269 DATED 11/07/2014 AND LETTER NO. DIT(INV) - II/INFORMATION/BLS/SAL/2014 - 15/269 DATED 16/07/2014 HAS FORWARDED INFORMATION REGARDING SHRI BHANWARLAL JAIN GROUP INVOLVED IN PROVIDING ACCOMMODATIONS ENTRIES IN THE NATURE OF : (I) ACCO MMODATION ENTRY FOR LOANS AND ADVANCES. (II) ACCOMMODATION ENTRY FOR BOGUS PURCHASES. (III) IMPORTS MADE ON BEHALF OF REAL IMPORTERS. 3. A SEARCH AND SEIZURE ACTION WAS CARRIED OUT IN THE CASE OF SHRI BANWARLAL JAIN GROUP ON 03/10/2013. EVIDENCES WERE C OLLECTED AND STATEMENTS OF VARIOUS PERSONS WERE RECORDED DURING THE SEARCH INCLUDING THAT OF BHANWARLAL JAIN. IT WAS CATEGORICALLY ADMITTED BY THEM THAT THEY HAD ONLY PROVIDED ENTRIES TO VARIOUS CONCERNS. ALL THE CONCERNS WERE RUN, CONTROLLED AND OPERATED BY SHRI BANWARLAL JAIN GROUP WHO INDULGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES ONLY. 4. ON PERUSAL OF THE INFORMATION, IT IS SEEN THAT M/S. AHINSA JEWELLERY (MFG) CO. PVT. LTD. (PAN - AAICA 3320 J) WHICH IS ASSESSED BY THE UNDERSIGNED IS ONE O F THE BENEFICIARY COMPANY WHO HAS OBTAINED ACCOMMODATION ENTRIES AMOUNTING TO RS.1,21,07,080/ - FROM THE HAWALA PARTY MENTIONED IN THE TABLE BELOW IN DURING THE PREVIOUS YEAR F.Y> 2011 - 12 RELEVANT TO A.Y. 2012 - 13. THE DETAILS OF THE BOGUS PURCHASE INVOICE O BTAINED BY THE ASSESSEE COMPANY FOR A.Y. 2012 - 13. SR. NO. NAME OF THE CONCERNS PARTY PAN A.Y. AMOUNT (RS.) 1 LUCKY EXPORTS AEQPL8566A 2012 - 13 1,21,07,080/ - 3 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO 5. IN VIEW OF THE ABOVE, AS THE ASSESSEE COMPANY HAS OBTAINED ACCOMMODATION ENTRIES OF RS.1,21,0 7,080/ - DURING THE PREVIOUS YEAR 2011 - 12 RELEVANT TO A.Y. 2012 - 13, WHICH TANTAMOUNT TO REDUCTION OF PROFIT AND THUS ESCAPEMENT OF INCOME TO THAT EXTENT. IN VIEW OF THE FACTS MENTIONED ABOVE, I HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX OF THE AS SESSEE OF AN AMOUNT OF RS.1,21,07,080/ - HAS ESCAPED ASSESSMENT. THUS, IN VIEW OF SECTION 147 OF I.T. ACT, 1961 INCOME ESCAPING ASSESSMENT IS REQUIRED TO BE RE - ASSESSED AND ACCORDINGLY NOTICE U/S. 148 IS TO BE ISSUED FOR A.Y. 2012 - 13. 4 . THE ASSESSING OFF ICER IN THE COURSE OF ASSESSMENT ISSUED NOTICES AND REQUIRED VARIOUS INFORMATION. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE AGREED FOR 12.5% DISALLOWANCE FOR THE PURCHASES MADE FROM LUCKY EXPORTS. THE ASSESSING OFFICER HELD AS UNDER: 5.7 THE SUBMISSIONS MADE BY THE A.R. OF THE ASSESSEE ARE DULY CONSIDERED O N 15/12/2016 THE A.R. OF THE ASSESSEE HAS ATTENDED AND STATED THAT HE IS READY TO MADE ADDITION @12.5% ON ACCOUNT PURCHASES MADE FROM LUCKY EXPORT. ON PERUSAL OF THE SUBMISSION MADE BY THE A SSESSEE IT HAS BEEN NOTICED THAT THE ASSESSEE HAS FURNISHED ONLY COPIES OF BILLS, BANK STATEMENT AND COPY OF LEDGER ACCOUNT OF THE ABOVE THREE PARTIES. NO STOCK REGISTER AND COPY OF TRANSPORTATION RECEIPT, COPY OF CORRESPO NDING SALES BILLS, COPY OF CHALL AN S OF VAT PAID ON THE SAME HAS BEEN FURNISHED FOR VERIFICATION. 5.8 IT IS NOT OUT OF PLACE TO MENTION HEREWITH MERE FILING LEDGER ACCOUNT AND PAYMENT MADE THROUGH ACCOUNT PAYEE CHEQUE CANNOT BE A PROOF AT ALL IN A CASE WHERE GENUINENESS OF TRANSACTION IS IT SELF IS IN DOUBT. ON EXAMINATION OF THE FACTS IN TOTALITY AND FROM THE SUBMISSION OF THE ASSESSEE IT IS TO BE INFERRED THAT THE ASSESSEE HAS NOT PURCHASED THE GOODS FROM THE ALLEGED SUPPLIERS. THE ASSESSEE HAS PURCHASED GOODS FROM SOME UNDISCLOSED PARTIES IN CASH AND JUST OBTAINED BOGUS BILLS IN FICTITIOUS NAME AND MADE THE PAYMENT TO GIVE COLOUR OF GENUINE PURCHASE. LOGICAL CONCLUSION WHICH MAY BE DRAWN M SUCH A SITUATION IS THAT THE ASSESSEE HAS RECORDED SALES IN THE BOOKS OF ACCOUNTS WHICH MATERIAL ARE P URCHASED FROM THE UNDISCLOSED PARTIES WITHOUT BILLS AT COMPARATIVELY LESSER PRICES . TO REGULARIZE THE PURCHASES FROM UNDISCLOSED PARTIES, THE ASSESSEE HAS TAKEN ACCOMMODATION BILLS FROM THE ABOVE SAID PARTIES. 5.9 IT IS NOT OUT OF PLACE TO MENTION HEREWIT H THAT NOTICE U/S 133(6) OF (HE IT. ACT, 1961 WAS ALSO ISSUED TO M/S LUCKY EXPORT ON 21/10/2015. IN RESPONSE TO THE NOTICE U/S 133(6), M/S LUCKY EXPORT HAS FURNISHED ITS REPLY ALONG WITH 4 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO COPIES OF BILLS, INCOME TAX RETURN ACKNOWLEDGMENT AND COPY OF CONFIRM ATION. ON PERUSAL OF THE REPLY FILED IT IS SEEN THAT NO SIGNATURE AND SEAL ARE THERE ON CONFIRMATION FURNISHED, NO SIGNATURE AND SEAL ON ONE INVOICE DATED 05/01/2015 AMOUNTING TO RS, 12.37,0007 - AND ALSO ON REMAINING TWO INVOICES ARE SIGNED BY TWO DIFFEREN T PERSONS WITH SAME NAME. THEREFORE, THE REPLY OF THE LUCKY EXPORT COULD NOT BE RELIABLE. 5.10 CONSIDERING THE FACTS AND FINDINGS IN THE PARAGRAPHS MENTIONED ABOVE, IT IS HELD THAT THE ASSESSEE DID NOT PURCHASE ANY GOODS FROM THE ABOVE PARTIES. MERE FACT THAT THE PAYMENT HAS BEEN MADE THROUGH BANKING CHANNEL IS NOT CONCLUSIVE OF THE EXPENDITURE BEING GENUINE. THE ASSESSEE HAS ALSO FATTED TO PRODUCE THE PARTY FOR VERIFICATION. HOWEVER, THE ASSESSEE HAS FAILED TO FURNISH THE COGENT EVIDENCES IN RESPECT OF TH E CLAIM MADE BY HIM. IN THE EVENT, THE ASSESSEE IS NOT IN A POSITION TO ESTABLISH THE GENUINENESS OF THE TRANSACTION, IT IS REQUIRED THAT THE ASSESSEE OUGHT TO HAVE OFFERED TO PRODUCE THE PERSONS REPRESENTING THE ALLEGED SUPPLIES FOR VERIFICATION OF THE CL AIM MADE. 5.11 THE A.R. OF THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 15/02/2016 HAS ACCEPTED THE ADDITION MADE @12.5% OF PURCHASES MADE FROM LUCKY EXPORT AND READY TO PAY TAXES AND NOT FILE TO APPEAL. 5.12 TAKING INTO ACCOUNT THE ABOVE FACTS AND CIRCUMST ANCES AND ADMISSION OF THE A.R, OF THE ASSESSEE, THE FAIR CONCLUSION THAT CAN BE REACHED IS THAT THE ASSESSEE WAS A BENEFICIARY OF THE ACCOMMODATION BILLS ISSUED BY THE PARTY MENTIONED ABOVE, THEREFORE, THE PROFIT ON BOGUS PURCHASE IS TREATED AT 12.50% OF THE AMOUNT OF BOGUS PURCHASE, WHICH IS CONSIDERED AS REASONABLE. 5.13 THIS VIEW IS TAKEN IN CONSIDERATION OF THE DECISION OF HON'BIE GUIRAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH (2013) (256 ITR 451) WHEREIN THE LE COURT CONFIRMED THE VIEW TAKEN B Y THE ITAT TO RESTRICT THE ADDITION ON ISSUE OF BOGUS PURCHASE UP TO 12.5% OF AMOUNT OF BOGUS PURCHASE. 5.14 IN VIEW OF THE ABOVE, 12.50% OF BOGUS PURCHASE OF RS.1,21,07,080/ - I.E. RS.15,13,385/ - IS TREATED AS PROFIT ON BOGUS PURCHASES AND THE SAME IS ADDE D TO THE TOTAL INCOME OF THE ASSESSEE. 5 . AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONTENDING BOTH THE VALIDITY OF REOPENING AND MERITS OF THE ADDITION. 6 . AS REGARDS THE REOPENING, THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) CONFIRMED THE VALIDITY OF REOPENING. HE OBSERVED AS UNDER: 5 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS AND SUBMISSIONS MADE BY THE ID. AR. WITH REGARD TO REOPENING OF ASSESSMENT IT IS UNDERSTOOD THAT THE AO WAS IN RECEIPT OF I NFORMATION FROM DIT(LNV.)MUMBAI THAT THE APPELLANT WAS BENEFITED FROM ACCOMMODATION ENTRIES FROM M/S. LUCKY EXPORTS OPERATED BY BHANWARLAL JAIN GROUP, THE ENTRY OPERATORS. IT WAS ADMITTED BY BHANWARLAL JAIN GROUP UNDER OATH DURING THE COURSE OF SEARCH & SE IZURE OPERATIONS CONDUCTED BY DIT(LNV.),MUMBAI THAT THEY GIVE ACCOMMODATION ENTRIES WITHOUT SUPPLY OF MATERIAL OR LOAN OR INVESTMENT IN SHARES. BASED ON SUCH INFORMATION THE AO HAS ISSUED NOTICE U/S 148 AND REOPENED THE ASSESSMENT. THERE WAS NO SCRUTINY PR IOR TO ISSUE OF NOTICE U/S 148 AND THE ASSESSMENT WAS REOPENED WITHIN 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IT IS HELD THAT THE REOPENING EVEN BEYOND FOUR YEARS FROM THE END OF THE RELEVANT A.Y AND EVEN THOUGH ASSESSMENT IS CONCLUDED U/S 14 3(3) ALSO HELD VALID IN VIEW OF THE LATEST DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HITESH R. SHAH (2013) 35 TAXMANN.COM 474, WHEN THE REOPENING IS DONE BASED ON EXTERNAL INFORMATION. THIS DECISION WAS RENDERED IN THE CASE OF PRAVEEN JAIN C ASE, ANOTHER ENTRY OPERATOR WHO HAS GIVEN SIMILAR ACCOMMODATION ENTRIES OF PURCHASES. 7 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER REFERRED TO SEVERAL CASE LAWS IN THIS REGARD. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDED AS UNDER: 4 .2.1. IN VIEW OF THE ABOVE DISCUSSION THE REOPENING OF ASSESSMENT IS HELD VALID SINCE THERE WAS 'TANGIBLE MATERIAL' AVAILABLE WITH THE AO AT THE TIME OF REOPENING THE ASSESSMENT IN THE FORM OF INDEPENDENT EXTERNAL INFORMATION RECEIVED FROM THE DIT INVESTI GATION. FURTHER, AS THE ASSESSMENT IS REOPENED BASED ON THE EVIDENCE COLLECTED AND STATEMENTS RECORDED DURING THE COURSE OF SEARCH OF 'ENTRY PROVIDERS', THE AO HAS A 'REASON TO BELIEVE' THAT INCOME HAS ESCAPED ASSESSMENT. AS SUCH THERE IS NO CHANGE OF OPIN ION. THE REOPENING PROCEEDINGS ARE, THEREFORE, ARE VALID. 4.2.2 WITH REGARD TO THE ARGUMENT THAT NOTICE U/S.143(2) WAS ISSUED ON 26/05/2015 WHICH IS BEYOND 12 MONTHS FROM THE DATE OF FILING OF RETURN OF INCOME ON 26/09/2012, THEREFORE, THE NOTICE IS TIME BARRED AND THE ASSESSMENT IN QUESTION CONCLUDED U/S 143(3) R.W.S.147 ON 25/02/2016 BASED ON SUCH NOTICE IS ILLEGAL AND BAD IN LAW IS NOT ACCEPTABLE. THE PROVISIONS OF SEC. 143(2) SPEAK OF ONLY RETURN FILED U/S 139 AND RETURN FILED IN RESPONSE TO NOTICE U/ S 142(1) BUT DOES NOT SPEAK OF NOTICE ISSUED U/S 148 OF THE ACT. THE PROVISIONS OF SEC.143(2) ARE REPRODUCED AS UNDER: - 6 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO [(2) WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139. OR IN RESPONSE TO A NOTICE UNDER SUB - SECTION (I) OF SECTION 142. TH E ASSESSIN G OFFICER OR THE PRES CRIBED INCOME - TAX AUTHORITY, AS THE CASE MAY BE, IF, CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER - PAID THE TAX IN ANY MANNER, SHALL S ERVE ON THE ASSESSEE A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND THE OFFICE OF THE ASSESSING OFFICER OR TO PRODUCE, OR CAUSE TO BE PRODUCED BEFORE THE ASSESSING OFFICER ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN: PROVIDED THAT NO NOTICE UNDER THIS SUB - SECTION SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED.] AS PER THE EXISTING PROVISIONS, A RETURN HAS TO BE FILED IN RESPONSE TO NOTICE U/S 148 OR A LETTER TO BE FILED BY THE ASSESSEE REQUESTING TO TREAT THE ORIGINAL RETURN FILED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 CAN BE RECKONED IN WHICH CASE 12 MONTHS FOR ISSUE OF NOTICE U/S 143(2) WILL BE COUNTED FROM THE DATE OF FILING OF SUCH RETURN OR LETTER FILED. IN THE INSTANT CASE THERE WAS NO SCRUTINY INITIALLY, THEREFORE THERE WAS NO OCCASION TO ISSUE NOTICE U/S 143(2) TO THE RETURN FILED U/S 139. WHEN THE NOTICE U/S WAS ISSUED ON 23/02/2015 THE APPELLANT HAS FILED A LETTER ON 10/03/2015 REQUES TING TO CONSIDER THE ORIGINAL RETURN OF INCOME FILED ON 26/09/2012 AS RETURN OF INCOME FILED IN PURSUANCE TO NOTICE ISSUED U/S 148. THEREFORE, THE NOTICE ISSUED U/S ON 26/05/2015 IS TO BE TAKEN AS ISSUED WITHIN THE PRESCRIBED LIMIT OF 12 MONTHS WHEN TAKEN FROM THE LETTER FILED ON 10/03/2015. THEREFORE, THE ARGUMENT OF THE L D.AR IS NOT TENABLE. 4.2.3 WITH REGARD TO ANOTHER ARGUMENT THAT THE APPELLANT WAS NOT GIVEN OPPORTUNITY TO REBUT THE DOCUMENTS AND STATEMENTS BASED ON WHICH THE ASSESSMENT WAS REOPENED IS ALSO NOT ACCEPTABLE. FIRSTLY, THE AO HAS CLEARLY INTIMATED THE DETAILS OF ACCOMMODATION ENTRY RECEIVED FROM LUCKY EXPORTS OPERATED BY BHANWARLAL JAIN GROUP WHO ARE THE ENTRY OPERATORS WHO HAVE ADMITTED THE SAME FACTS BEFORE THE INVESTIGATION AUTHORITIES OF THE DEPARTMENT. SECONDLY, THE ASSESSEE KNOWS VERY WELL EITHER OF THE PARTIES I.E. EITHER BHANWARLAL JAIN OR LUCKY EXPORTS SINCE IT CLAIMED RECEIPT OF MATERIAL(DIAMONDS) FROM THEM. THEREFORE, THE CLAIM OF THE APPELLANT THAT THEY WERE NOT AWARE OF THE DOCUMENTS OR STATEMENTS GIVEN BY BHANWARLAL JAIN GROUP IS NOT CORRECT. THIRDLY, WHEN BHANWARLAL JAIN GROUP CLAIMS THAT THE CONCERNS FLOATED BY THEM INCLUDING LUCKY EXPORTS IS ONLY A PAPER ENTITY AND 7 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO WHEN SUCH CONCERN I.E. LUCKY E XPORTS IS APPEARING IN THE BOOKS OF THE APPELLANT COMPANY, THEN A LIVE LINK HAS BEEN ESTABLISHED BETWEEN THE BOGUS CONCERN AND THE APPELLANT COMPANY. THEREFORE, THE REOPENING OF THE ASSESSMENT MADE BY THE AO ON SUCH INFORMATION IS IN ORDER. 4.2.4 IN VIE W OF THE ABOVE DISCUSSION, THE REOPENING OF ASSESSMENT IS HELD VALID AND THE ARGUMENT OF THE ID.AR ARE REJECTED. THE GROUND IS, THEREFORE, DISMISSED. 8 . ON MERITS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AFFIRMED THE ORDER OF THE ASSESSING OFFICER. 9 . AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 10 . I HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. AS REGARDS THE REOPENING OF THE CASE , ON A CAREFUL CONSIDERATION, I NOTE THAT IN THIS CASE INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER FROM DGIT INVESTIGATION (MUMBAI) THERE ARE SOME PARTIES WHO ARE ENGAGED IN THE HAWALA TRANSACTIONS AND ARE ALSO INVOLVED IN ISSUING BOGUS PURCHASE BILLS FOR SALE OF MATERIAL WITHOUT DELIVERY OF GOODS, WHICH INFORMATION WAS BASED ON INFORM ATION RECEIVED BY REVENUE FROM MAHARASHTRA SALES TAX AUTHORITY. INFORMATION WAS RECEIVED THAT THE ASSESSEE WAS BENEFICIARY OF HAWALA ACCOMMODATION ENTRIES FROM ENTRY PROVIDERS BY WAY OF BOGUS PURCHASE. THE ACCOMMODATION ENTRY PROVIDER HAS DEPOSED AND ADMIT TED BEFORE THE MAHARASHTRA SALES TAX AUTHORITY VIDE STATEMENT/ AFFIDAVIT THAT THEY WERE ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES WHEREIN BOGUS SALE BILLS WERE ISSUED WITHOUT DELIVERY OF GOODS, IN CONSIDERATION FOR COMMISSION. THESE, ACCOMMODATION E NTRY PROVIDERS, ON 8 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO RECEIPT OF CHEQUES FROM PARTIES AGAINST BOGUS BILLS FOR SALE OF MATERIAL, LATER ON WITHDREW CASH FROM THEIR BANK ACCOUNTS, WHICH WAS RETURNED TO BENEFICIARIES OF BOGUS BILLS AFTER DEDUCTION OF THEIR AGREED COMMISSION. THE ASSESSEE WAS ST ATED TO BE ONE OF THE BENEFICIARIES OF THESE BOGUS ENTRIES OF SALE OF MATERIAL FROM HAWALA ENTRY OPERATORS IN FAVOUR OF THE ASSESSEE WHEREIN THE ASSESSEE MADE ALLEGED BOGUS PURCHASES THROUGH THESE BOGUS BILLS ISSUED BY HAWALA ENTRY PROVIDERS IN FAVOUR OF T HE ASSESSEE. THESE DEALERS WERE SURVEYED BY THE SALES TAX INVESTIGATION DEPARTMENT WHEREBY THE DIRECTORS OF THESE DEALERS HAVE ADMITTED IN A DEPOSITION VIDE STATEMENTS/AFFIDAVIT MADE BEFORE THE SALES TAX DEPARTMENT THAT THEY WERE INVOLVED IN. ISSUING BOGUS PURCHASE BILLS WITHOUT DELIVERY OF ANY MATERIAL. THERE IS A LIST OF SUCH PARTIES WHEREIN THE ASSESSEE IS STATED TO BE BENEFICIARY OF BOGUS PURCHASE BILLS. 11. FROM THE ABOVE, I FIND THAT TANGIBLE AND COGENT INCRIMINATING MATERIAL WERE RECEIVED BY THE AO WHICH CLEARLY SHOWED THAT THE ASSESSEE WAS BENEFICIARY OF BOGUS PURCHASE ENTRIES FROM BOGUS ENTRY PROVIDERS WHICH FORMED THE REASON TO BELIEVE BY THE AO THAT INCOME HAS ESCAPED ASSESSMENT. THE INFORMATION SO RECEIVED BY THE AO HAS LIVE LINK WITH REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. ON THESE INCRIMINATING TANGIBLE MATERIAL INFORMATION, ASSESSMENT WAS REOPENED. AT THIS STAGE THERE HAS TO BE PRIMA FACIE BELIEF BASED ON SOME TANGIBLE AND MATERIAL INFORMATION ABOUT ESCAPEMENT OF INCOME AND TH E SAME IS NOT REQUIRED TO BE PROVED TO THE GUILT. IN 9 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO THIS REGARD, I REFER TO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT(A) VS. RAJESH JHAVERI STOCK BROKERS P. LTD, 291 ITR 500: - 'SECTION 147 AUTHORISES AND PERMITS THE ASSESSING OFFICER TO AS SESS OR REASSESS INCOME CHARGEABLE TO LAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE (HAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANAGNESE ORE CO, LTD. V. ITO(1991) 191 ITR 662, FOR INITIATION OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE REL EVANT TIME) FULFILLMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT THE ESTABLISH ED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NO T THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE AO IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION ITO V. SELECTED DALURBAND COAL CO, (P.) LTD. (1996) 217 ITR 597 (SUPREME COURT): RAYMOND WOOLLEN MILLS LTD. V. ITO (1999) 236 I TR 34 (SUPREME COURT). 12. THE ABOVE DISCUSSION AND PRECEDENT FROM APEX COURT FULLY JUSTIFY THE VALIDITY OF REOPENING IN THIS CASE. FURTHER I FIND THAT THE LD. CIT(A) HAS CAREFULLY EXAMINED THE ISSUE AND HAS PROPERLY APPRECIATED THE ISSUE. HENCE, I DO N OT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY, I UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF REOPENING. SINCE, THE ISSUE HAS BEEN DECIDED ON THE BASIS OF THE HONBLE APEX COURT DECISION, THE OTHER CASE LAWS REFERRED BY ASSESSEE ARE NOT SUPPORTING T HE ASSESSEES CASE. 10 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO 13. AS REGARDS MERITS OF ADDITION, I FIND THAT CREDIBLE AND COGENT INFORMATION WAS RECEIVED IN THIS CASE BY THE ASSESSING OFFICER THAT CERTAIN ACCOMMODATION ENTRY PROVIDER/BOGUS SUPPLIERS WERE BEING USED BY CERTAIN PARTIES TO OBTAINED BOGUS BILLS, ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATION ENTRY/BOGUS PURCHASE BILLS DURING THE CONCERNED ASSESSMENT YEAR FROM DIFFERENT PARTIES. BASED UPON THIS INFORMATION ASSESSMENT WAS REOPENED. THE CREDIBILITY OF INFORMATION RELATING TO REOPENING HAS BEEN CONFIRMED BY THE LEARNED CIT(A) AND BY ITAT AS ABOVE. FURTHERMORE IT IS NOTED THAT IN SUCH FACTUAL SCENARIO ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABL E TO PROVIDE ANY CONFIRMATION FROM ANY OF THE PARTY. ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. THE NECESSARY EVIDENCE FOR TRANSPORTATION OF GOODS HAVE NOT BEEN PROVIDED BY THE ASSESSEE. IN THIS FACTUAL SCENARIO IT IS AMPLY THAT ASSESSE E HAS OBTAINED BOGUS PURCHASE BILLS. MERE PREPARATION OF DOCUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELMING EVIDENCE THAT THE PROVIDER OF THESE BILLS ARE BOGUS AND NON - EXISTENT AND THERE IS NO COGENT EVIDENCE OF TRANSPORTATION OF GOODS. THE SALES TAX D EPARTMENT IN ITS ENQUIRY HAVE FOUND THE PARTIES TO BE PROVIDING BOGUS ACCOMMODATION ENTRIES. THE ASSESSING OFFICER ALSO ISSUED NOTICES TO THESE PARTIES AT THE ADDRESSES PROVIDED BY THE ASSESSEE. ALL THESE NOTICES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BE EN ABLE TO PRODUCE ANY OF THE PARTIES. THE ASSESSING OFFICER HAS NOTED THAT THERE IS NO COGENT EVIDENCE OF THE PROVISION OF GOODS. NEITHER THE ASSESSEE 11 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO HAS BEEN ABLE TO PRODUCE ANY CONFIRMATION FROM THESE PARTIES. IN SUCH CIRCUMSTANCES, THERE IS NO DOUBT T HAT THESE PARTIES ARE NON - EXISTENT. 14. HENCE PURCHASE BILLS FROM THESE NON - EXISTENT THE/BOGUS PARTIES CANNOT BE TAKEN AS COGENT EVIDENCE OF PURCHASES, IN LIGHT OF THE OVERWHELMING EVIDENCE THE REVENUE AUTHORITIES CANNOT PUT UPON BLINKERS AND ACCEPT THESE PURCHASES AS GENUINE. THIS PROPOSITION IS DULY SUPPORTED BY HONBLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL 214 ITR 801 AND DURGA PRASAD MORE 82 ITR 540. IN THE PRESENT CASE THE ASSESSEE WANTS THAT THE UNASSAILABLE FACT THAT THE SUPPLIERS ARE NON - EXISTENT AND THUS BOGUS SHOULD BE IGNORED AND ONLY THE DOCUMENTS BEING PRODUCED SHOULD BE CONSIDERED. THIS PROPOSITION IS TOTALLY UNSUSTAINABLE IN LIGHT OF ABOVE APEX COURT DECISIONS. 15. IN THESE CIRCUMSTANCES LEARNED DEPARTMENTAL REPRESENTATIVE HAS REF ERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF APEX APPEAL NO. 240 OF 2003 IN THE CASE OF N K INDUSTRIES VS DY CIT, ORDER DATED 20.06.2016, WHEREIN HUNDRED PERCENT OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TR IBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES WAS SET ASIDE. IT WAS EXPOUNDED THAT WHEN PURCHASE BILLS HAVE BEEN FOUND TO BE BOGUS 100% DISALLOWANCE WAS REQUIRED. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.1.2017. 12 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO 16. I FURTHER NOTE THAT HONBLE RAJASTHAN HIGH COURT HAS SIMILARLY TAKEN NOTE OF DECISIONS OF THE APEX COURT ON THE ISSUE OF BOGUS PURCHASES IN THE CASE OF CIT JAIPUR VS SHRUTI GEMS IN ITA NO . 658 OF 2009. THE HONBLE HIGH COURT HAS REFERRED TO THE DECISION OF CIT JAIPUR VS. ADITYA GEMS, D. B. IN ITA NO. 234 OF 2008 DATED 02.11.2016, WHEREIN THE HONBLE COURT HAD INTER ALIA HELD AS UNDER: 'CONSIDERING THE LAW DECLARED BY THE SUPREME COURT IN THE CASE OF VIJAY PROTEINS LTD. VS. COMMISSIONER OF INCOME TAX, SPECIAL LEAVE TO APPEAL (C) NO.8956/2015 DECIDED ON 06.04.2015 WHEREBY THE SUPREME COURT HAS DISMISSED THE SLP CONFIRMED THE ORDER DATED 09.12.2014 PASSED BY THE GUJARAT HIGH COURT AND OTHER DECISIONS OF THE HIGH COURT OF GUJARAT IN THE CASE OF SANJAY OILCAKE INDUSTRIES VS. COMMISSIONER OF INCOME TAX (2009) 316 ITR 274 (GUJ) AND N.K. INDUSTRIES LTD. VS. DY. C.I.T., TAX APPEAL NO.240/2003 DECIDED ON 20.06.2016, THE PARTIES ARE BOUND BY THE PRIN CIPLE OF LAW PRONOUNCED IN THE AFORESAID THREE JUDGMENTS. 17 . HOWEVER, I NOTE THAT THIS IS NOT AN APPEAL BY THE REVENUE. HENCE, IT WILL NOT BE APPROPRIATE TO TAKE AWAY THE RELIEF ALREADY GRANTED BY THE REVENUE TO THE ASSESSEE. HENCE, I CONFIRM THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS). 18 . IN THE RESULT , THIS A P PEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.02.2018 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 05.02.2018 . . ./ ROSHANI , SR. PS 13 ITA NO. 4960/MUM/2017 (A.Y. 2012 - 13) M/S. AHINSA JEWELLERY MFG. CO. P. LTD. VS. ITO / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./A SSTT. REGISTRAR) , / ITAT, MUMBAI