Ravi Sheet Processors Pvt. Ltd, Ahmedabad V. The DCIT Central Circle-2(3), Ahmedabad

ITA 556/AHD/2020

AI Insights

The case revolves around the reassessment of income for the Assessment Year 2011-12 for Ravi Sheet Processors Pvt. Ltd., following a survey and search operation that uncovered alleged bogus sales transactions with M/s Jayesh Steel Group. The Income Tax Department conducted a survey at the assessee's premises and a search at the premises of M/s Jayesh Steel Group, leading to the discovery of evidence suggesting that the assessee issued bogus sales bills. The Assessing Officer (AO) issued a reassessment notice under section 148 of the Income Tax Act, which the assessee contested, arguing that the books of accounts were rejected without proper basis and that the reassessment was made merely on the statement of a director recorded during the survey. However, both the Commissioner of Income Tax (Appeals) and the Tribunal upheld the reassessment, citing the tangible evidences from the survey and search operations as sufficient grounds for the reassessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127169 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 11-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 12-11-2020
• Other Referred Cases: Praful Chunilal Patel Vs ACIT [1999] 236 ITR 832, Amit Polyprints (P.) Ltd. Vs DCIT [2018] 94 taxmann.com 393, Puchpak Bullion (P.) Ltd. Vs DCIT [2017] 85 taxmann.com 84, Aaspas Multimedia Ltd. Vs Deputy Commissioner of Income-tax, Circle 1(1) [2017] 83 taxmann.com 82
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Rejection of books of accounts; Principle of natural justice; Tangible material; Validity of assessment
• Section: 148; 143(3); 142(1); 133A; 143(1); 143(2)

Judgement Text

आयकर अपील य अ धकरण, अहमदाबाद यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’SMC’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.556/AHD/2020 नधा रणवष /Asstt. Year: 2012-13 Ravi Sheet Processors Pvt. Ltd. 614, Loha Bhavan, Old High Court Lane, Ashram Road, Ahmedabad PAN: AACCR8483R Vs. DCIT Central Circle-2(3), Ahmedabad (Applicant) (Respondent) Assessee by : None Revenue by : Shri Sanjaykumar, Sr. D.R स ु नवाईक तार ख/Date of Hearing : 12/01/2023 घोषणाक तार ख/Date of Pronouncement: 31/01/2023 आदेश/O R D E R The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-12, Ahmedabad dated 21/09/2020 arising in the matter of assessment order passed under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-12. 2. The Assessee has raised the following grounds of Appeals: “1. In law and on the facts and in the circumstances of the Appellant’s case, learned CIT(a) has erred in rejecting the relevant ground of appeal raised by appellant before him challenging the validity of the proceedings carried out u/s 147 of the I. T. Act. 2. In law and on the facts and in the circumstances of the Appellant’s case, AO has erred in issuing reassessment notice u/s 148 of the Act even though time limit for issuing notice u/s 143(2) of the Act for regular assessment has not expired on the date of issuing such notice. The ld CIT(A) ought to have quashed reassessment order passed by AO on the ground that there was failure on the part of Assessing Officer to take proper proceedings within the time prescribed for completeting regular assessment u/s 143(3) of the Act. 3. The appellant craves leave to add to, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” ITA No.556/AHD/2020 A.Y. 2012-13 2 3. In the present case, a search was conducted at the premises of another assessee namely M/s Jayesh Steel Group where it was found that it was engaged in bogus purchases from various companies, firms and parties. The present assessee was also one of the party among them which has shown sales to the group. 4. A survey was also conducted at the premises of the assessee dated 13-10- 2011 and the statement of Shri Saurabh, one of the director of the company was taken on oath under section 133A of the Act. He has admitted that the company has not made any actual sales to the M/s Jayesh Bhai Steel Ltd but has issued bogus sales bill only. The assessee received the payment through cheque and same amount of cash was paid to M/s Jayesh Steel Ltd. The department also impounded the sales bill file containing 1 to 50 bills. 5. It was submitted by the assessee that the goods were being sold to various parties which were not registered under VAT on cash basis. The cash collected from sales to these parties were used to make the cash payment to M/s Jayesh Steel Limited. However, the business transactions recorded in the books areshowing the correct profit. But the assessee failed to provide the details of the parties to whom the cash sales were made like name, address and documentary evidences. 6. However, the AO observed that the genuineness of the cash sales is not verifiable and books of accounts maintained by the assessee are not showing the correct picture of the business. So, the AO held the submission of the assessee not tenable and rejected the books of accounts of the assessee. Accordingly, the assessment was framed under section 147 of the Act after making an addition of Rs.14,04,789 only to the total income of the assessee. 7. Aggrieved assessee filed an appeal before Ld. CIT(A). The assessee before the ld. CIT-A has contested the validity of assessment under section 147 of the Act. It was submitted that the AO has rejected the books of Accounts of the ITA No.556/AHD/2020 A.Y. 2012-13 3 assessee merely relying on the statement given by the director of the company on oath under section 133A of the Act without any materials on record. All the transactions with M/s Jayesh Steel limited were duly recorded by the assessee and no defect of any unrecorded sales was pointed out by the AO. The additions in the assessment u/s 147 were made only on the basis of assumption without any corroborative evidence. The assessment under section 147 of the Act cannot be framed unless there are tangible materials. However, the Ld.CIT(A) has disregarded the contention of the assessee and upheld the reopening by observing that: “4.1 I have considered the facts, statements of facts enclosed by the appellant along with the appeal memo and submission filed by appellant. The appellant has filed original return of income declaring total income of Rs 9,38,382/- on 30/08/2012. The AO in assessment order stated that during the course of search proceedings in the case of Jayesh Steel Group, the evidences were found that said company were making bogus purchases from various companies and appellant is also one of the company from whom said Jayesh Steel Group have made bogus purchases. The AO has further stated that survey proceedings u/s 133A of the Act was conducted at the business premises of appellant company on 13/10/2011 wherein sales bill files being Page No 1 to 50 as per Annexure A was impounded. The statement of Shri Saurabh Naranbhai Patel, director of appellant company was also recorded wherein he has admitted that actual sale is not made to Jayesh Steel. During the year under consideration, appellant company has issued bogus sales bills of Rs 93,09,401/- to Jayesh Steel Group, AO had issued notice u/s 148 of the Act on 11/02/2014 for alleged escapement of income. 4.2 On behalf of the appellant, it was argued that reassessment notice has been issued merely on the basis of statement of director recorded during the course of survey proceedings. As statement recorded during the course of survey proceedings u/s 133A has no evidentiary value, such statement cannot be relied upon and consequential reassessment notice is bad in law since inception. The appellant has also contended that as there is no tangible material available on record which prove that appellant has made any unaccounted sales, reassessment notice deserves to be quashed. It was also argued by appellant that even intimation u/s 143(1) of the act cannot be subject matter of reassessment proceedings for verification in the absence of tangible material. The appellant has contended that copy of reasons recorded were not provided to it hence even on that ground, reassessment order being bad in law deserves to be quashed. 4.3 On careful consideration of entire facts, it is observed that entire reassessment notice has been issued based upon search proceedings carried out in the case of Jayesh Steel Group as well as survey proceedings carried out in the case of appellant. During the course of survey proceedings, director of appellant has admitted that appellant company has issued bogus sale bills to Jayesh Steel Group and even such sale invoices were also impounded during the course of survey proceedings. Thus, material and tangible evidences were gathered during the course of survey proceedings hence contention of appellant that reassessment notice was not based upon such tangible material cannot be accepted. It is pertinent to note that even in case of appellant, no assessment u/s 143(3) of the Act was passed wherein any inquiry relating to such bogus sales is made hence reassessment notice issued by AO is within four corners of law and held to be valid notice u/s 148 of the ITA No.556/AHD/2020 A.Y. 2012-13 4 Act. Reliance is placed on decision of Hon'ble Gujarat High court in the case of Praful Chunilal Patel Vs ACIT [1999] 236 ITR 832. Further, reliance is also placed on decision of Hon’ble Gujarat High Court in the case of Amit Polyprints (P.) Ltd. Vs DCIT [2018] 94 taxmann.com 393. Further, reliance is also placed on decision of Hon’ble Gujarat High Court in the case of Puchpak Bullion (P.) Ltd. Vs DCIT [2017] 85 taxmann.com 84. Hon’ble Gujarat High Court in case of Aaspas Multimedia Ltd. Vs Deputy Commissioner of Income-tax, Circle 1(1) [2017] 83 taxmann.com 82. 4.4 So far as contention of appellant that statement recorded u/s 133A of the Act has no evidentiary value hence reassessment notice cannot be issued based upon such statement, it is observed that statement recorded during the course of survey proceedings is not retracted by director of appellant company at later stage. It is observed that there is no bar for issuing reassessment notice for alleged escapement of income based upon such statement recorded u/s 133A of the Act. Even in present case, AO was having tangible material for alleged escapement of income based upon search proceedings carried out in the case of Jayesh Steel Group wherein it was found that said group has taken bogus purchase bills from appellant. Considering these facts, above referred legal plea taken by appellant is rejected. 4.5 So far as observation of Appellant that AO has not provided reasons recorded for initiating proceedings u/s 148 of the Act, it is observed that AO at page no 3 of assessment order has clearly stated that such reasons recorded are already provided to appellant. The appellant has not referred to any written submission filed before AO wherein they have requested AO to provide for such reasons recorded when notice u/s 142(1) was issued or final show cause notice was issued before making various additions in assessment order. The contention of appellant is not supported by evidences hence such legal plea is not accepted. 4.6 Considering the facts discussed herein above and relying upon decisions referred supra, reassessment notice as well as reassessment order passed by AO is held to be valid and this ground of appeal is dismissed.” 8. Being aggrieved by the order of the ld. CIT-A, the assessee preferred an appeal before me. 9. At the outset, I may like to mention that neither the concerned Counsel nor any other person on behalf of the assessee appeared before the Tribunal to represent the case or even seek an adjournment at the time of hearing. The case is very old pertaining to assessment year 2012-13 and has already been listed eight times for hearing but none of the time, anybody appeared.The Appellate Tribunal is the appointed machinery under the Act for finally deciding questions of fact in relation to assessment of income-tax. The provisions of the Income Tax Act oblige it to decide an appeal, after giving an opportunity to the parties to put ITA No.556/AHD/2020 A.Y. 2012-13 5 forward their case. The giving of the opportunity only emphasizes the character of the quasi- judicial function performed by the Appellate Tribunal. The fact that that opportunity is not availed in a particular case, will not entitle the Tribunal not to decide the case. Although, this appeal was filed by the assessee only. I was inclined to hear the contentions of the assessee. The Right to be heard in a suit is one of the tenets of principles of natural justice but the continuous absence and negligence of the assessee has left no option to me except to hear it ex-party. This liberty is in consonance with the provisions to Rule 24 of the Income-Tax (Appellate Tribunal) Rules, 1963, (hereinafter referred as "ITAT Rules") which read as under: " Where, on the day fixed for hearing or on any other date to which the hearing may be adjourned, the appellant does not appear in person or through an authorised representative when the appeal is called on for hearing, the Tribunal may dispose of the appeal on merits after hearing the respondent: 10. Therefore, in the given circumstances and considering the nature of dispute, I decided to proceed to dispose off the appeal ex–parte qua the assessee with the assistance of the learned Departmental Representative. 11. The Ld. DR before me vehemently relied upon the order of the authorities below. 12. I have heard the Ld. DR and perused the materials available on records. It was observed that the order of the authorities below has incorporated lots of evidences to substantiate their decision against the assessee. Whatever contentions were raised by the assessee before the ld. CIT-A, challenging the validity of the assessment order framed under section 147 of the Act, were disposed off by the ld. CIT-A in details with reasoning after referring plethora of judgments. Now, the onus to proof the findings of the authorities below as not justified lies upon the assessee. Nevertheless, the appeal was filed by the assessee itself. However, the assessee has not brought anything contrary to the findings of the authorities below. I was inclined to hear the contentions of the ITA No.556/AHD/2020 A.Y. 2012-13 6 assessee. As such, it seems that the assessee is not interested in pursuing his claims as it failed to appear despite giving so many opportunities by the Tribunal. Hence, I would like not to interfere in the order of the authorities below. Hence, the appeal of the assessee is dismissed. 13. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the Court on 31/01/2023 at Ahmedabad. Sd/-/- (WASEEM AHMED) (True Copy) ACCOUNTANT MEMBER Ahmedabad; Dated 31/01/2023 Tanmay, Sr. PS TRUE COPY आदेशक त ल प!े षत/Copy of the Order forwarded to : आदेशान ु सार/BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपील यअ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धतआयकरआय ु त/ Concerned CIT 4. आयकरआय ु त(अपील) / The CIT(A) 5. !वभागीय $त$न ध, आयकरअपील यअ धकरण/ DR, ITAT, 6. गाड&फाईल / Guard file.