RA BIOATECH P.LTD, MUMBAI V. ITO 13(3)(1), MUMBAI

ITA 7224/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9158 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 08-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Bogus purchase; Tangible material; Accommodation entries; Assessment record; Reason to believe
• Section: 133(6); 147; 148; 144

Judgement Text

, E , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI SHAMIM YAHYA , AM & SHRI SANDEEP GOSAIN, JM ITA NO. 7224 /MUM/20 16 : ASST.YEARS 2009 - 2010 M/S.RA BIOTECH PRIVATE LIMITED B - 202, RAJESH TOWER, RAJESH NAGAR SAIBABA NAGAR, BORIVALI WEST MUMBAI 400 092. PAN : AACCR7517C. / VS. THE INCOME TAX OFFICER WARD 13(3)(1) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : --- NONE --- /RESPONDENT BY : SHRI V.JUSTIN / DATE OF HEARING : 17 .08.2017 / DATE OF PRONOUNCEMENT : 16.10. 2 017 / O R D E R PER SHAMIM YAHYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT(A) DATED 12.08.2016 AND PERTAINS TO ASSESSMENT YEAR 2009 - 2010. 2. THE GROUNDS OF APPEAL READ AS UNDER: - 1. THE LEARNED CIT (APPEALS) WITHOUT VERIFYING THE ASSESSMENT RECORDS AND LAW HAS CONFIRMED THE ACTION OF A.O. FOR ISSUING NOTICE U/S 148 WAS IN ACCORDANCE WITH LAW, THIS FINDING IS TOTALLY ARBITRARY & ILLEGAL AND WITHOUT VERIFICATION OF ASSESSMENT ORDER. 2. THAT THE LEARNED CIT (APPEALS) HAS WITHOUT VERIFYING THE ASSESSMENT RECORDS THAT WHETHER THE SERVICE OF NOTIC E BY AFFIXTURE WAS DEFECTIVE OR CORRECT HAS ACCEPTED THE SAME WHICH IS BAD IN LAW. ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 2 3. THAT THE ASSESSMENT WAS MADE U/S 144 HENCE FOR THE QUESTION OF CHALLENGING THE SERVICE OF NOTICE BY THE ASSESSEE, THE LEARNED CIT (APPEALS) WITHIN HIS JURISDICTION COU LD HAVE VERIFIED THE FACTS FROM ASSESSMENT RECORDS AND COULD HAVE DECIDED THE CASE ON MERIT. 4. THAT THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER RS. 10211397/ - AS BOGUS PURCHASES MADE WHICH RESULTED THE GP % AS - 9.96% (NEGATIVE GP) FROM 8.63% GP AS DECLARED BY THE ASSESSEE AND ON THE CONTRARY THE SALES HAVE BEEN ACCEPTED. WITHOUT PURCHASES NO SALES COULD BE MADE. 5. THAT THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION BY INVOKING THE PROVISIONS OF SE C. 69C. THE BURDEN LIES ON DEPARTMENT TO PROVE THAT WHICH OF THE AMOUNT WAS NOT RECORD IN THE BOOKS OF ACCOUNT. HENCE THE ACTION OF LEARNED CIT(APPEALS) WAS ILLEGAL AND BAD IN LAW. 6. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE, AMEND OR ABANDON ANY OF THE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING. 3. IN THIS CASE REASSESSMENT WAS OPENED ON THE BASIS OF INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS OBTAINED PURCHASE BILLS FROM BOGUS HAWALA DEALERS. THE LIST OF SUCH HAWALA TRADERS FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE MADE PURCHASES IS AS UNDER: SN NAME OF THE PARTY AMOUNT OF PURCHASE HAWALA PAN 1. PUSHPHARI ELECTRICALS & ENGINEERS PVT LTD 6295361 AABCP6273A 2 GRIFTON INDIA /RIDDHI ENTERPRISE 1250460 ABQPV4099K 3 STATUS MERCANTILE PVT LTD 2665576 AALCS0195E TOTAL 1,02,11,397 ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 3 3.1 THE NOTICES U/S 133(6) ISSUED TO PARTIES LISTED IN THE ABOVE TABLE BY THE A.O. WERE RETURNED UN - SERVED BY THE POSTAL AUTHORITIES. IN VIEW OF THIS, THE ASSESSEE WAS INFORMED THAT THE NOTICES U/S. 133(6) OF THE IT ACT WERE ISSUED TO THE ABOVE MENTIONED PARTIES HAD BEEN RETURNED UN - SERVED BY THE POSTAL AUTHORITIES FOR THE ABOVE PARTIES . DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUMMONS WERE ISSUED TO THE DIRECTOR SHRI NILESH JOSHI WHO HAS SIGNED THE BALANCE SHEET OF ASSESSEE COMPANY FOR YEAR ENDED 3L.03.2009, IE. FOR A.Y.2009 - 10.THE DIRECTOR WAS SHOWN THE STATEMENT GIVEN BY THE HAWALA BILLERS AS ABOVE AND HE WAS ASKED TO OFFER HIS COMMENTS ON THE ISSUE OF THE EXPENSES BOOKED BY THE ASSESSE E COMPANY IN THE NAME OF SUCH CONCERNS. HE WAS ALSO ASKED TO PRODUCE ORIGINAL BILLS, INVOICES, DELIVERY CHALLANS IN RESPECT OF PURCHASES CLAIMED TO H AVE BEEN MADE FROM ABOVE CONCERNS. SHRI NILESH JOSHI ADMITTED THAT HE HAD SIGNED THE BALANCE SHEET WAS SIGNED BY HIM BUT STATED THAT ALL THE AFFAIRS OF THE COMPANY WERE LOOKED AFTER BY SHRI RAJIV BAJPAI ,THE OTHER DIRECTOR, AND HENCE HE WAS NOT ABLE TO COM MENT ON THE ISSUE. HE PROMISED TO FURNISH LATEST ADDRESS O F SHRI RAJIV BAJPAI, BUT THE SAME HAS NOT BEEN FURNISHED TILL DATE. NOTICES WERE ISSUED AND SENT TO OTHER DIRECTORS SHRI PAWAN BHAGAT, SHRI AJAY SINGH , BUT THERE HAS BEEN NO COMPLIANCE. IN THESE CIR CUMSTANCES, THE A.O. NOTED THAT I N ABSENCE OF ANY COMPLIANCE FROM THE ASSESSEE COMPANY THE ISSUE IS DECIDED ON MERITS BASED ON MATERIAL EVIDENCE AVAILABLE ON RECORD. 3.2 THE A.O. OBSERVED THAT A S STATED EARLIER, NOTI CE S U/S. 133(6) WERE ISSUED TO THESE PA RTIES MENTIONED ABOVE CALLING FOR DETAILS OF TRANSACTIONS MADE BY THEM WITH THE ASSESSEE IN ORDER TO VERIFY THE GENUINENESS OF THE ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 4 PURCHASES. THAT S INCE THE NOTICES U/S. 133(6) WERE RETURNED UN - SERVED BY THE POSTAL AUTHORITIES, THE ASSESSEE WAS ASKED TO PR ODUCE THE PARTIES ALONG WITH THE DOCUMENTS SO AS TO VERIFY THE GENUINENESS OF THE PU RCHASES SHOWN BY THE ASSESSEE. THAT T HE ONUS LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF ANY EXPENDITURE WHICH IS CLAIMED AS DEDUCTION IN COMPUTING ITS TAXABLE INCOME. IN THIS CASE, THE ONUS LIES ON THE A SSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES AND THE ASSESSEE HAD TO PROVE THAT THE SUPPLIERS WERE GENUINE SUPPLIERS OF V ARIOUS TYPES OF RAW MATERIALS. THAT T HE ASSESSEE HAS NOT MADE ANY EFFORT T O DISCHARGE THE ONUS. THAT T HE ASSESSEE HAS FAILED TO PRODUCE ANY OF THE PARTIES IN - SPITE OF SPECIFIC OPPORTUNITY PROVIDED AS DISC USSED ABOVE. THAT T HE PARTIES DO NOT EXIST AT THE GIVEN ADDRESS AND THE ASSESSEE HAS NOT FURNISHED THE CHANGE OF ADDRESSES OF ANY OF THE ABOVE MENTIONED PARTIES. THAT T HE ASSESSEE HAS NOT SUBMITTED THE EVIDENCES OF THE PU RCHASE LIKE DELIVERY CHALLANS, TRANSPORT BILLS ETC., AND ONLY LEDGER EXTRACTS OF THE ABOVE PARTIES AS PER THE BOOKS OF THE ASSESSEE HAVE BEEN SUBMITTED. JUST MAK ING PAYMENTS BY ACCOUNT PAYEE CHEQUES IS NOT ENOUGH EVIDENCE TO PROVE THE EXISTENCE OF THE PARTIES AND ALSO THE GENUINENESS OF THE TRANSACTION. THAT I N VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT THE PURCHASES SHOWN TO HAVE BEEN MADE WITH THE ABOVE MENTIONED PARTIES ARE BOGUS TRANSACTIONS . ACCORDINGLY, THE A.O. MADE ADDITION OF ENTIRE AMOUNT OF RS.1,02,11,397. 4. AGAINST THE ABOVE ORDER, ASSESSEE APPEALED BEFORE THE LEARNED CIT(A) CHALLENGING BOTH THE VALIDITY OF REOPENING AS WELL AS MERITS OF ADDITION. 5. THE LEARNED CIT(A) HELD THAT THE REOPENING WAS VALID. IN THIS REGARD, LEARNED CIT(A) HELD AS UNDER: - ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 5 6. IN THE FIRST GROUND OF APPEAL, APPELLANT ALLEGED THAT NOTICE U/S.148 IS BAD IN LAW SINCE NO PERMISSION OR PRIOR APPROVAL WAS OBTAINED BY THE ASSESSIN G OFFICER FROM JT. COMMISSIONER OF INCOME TAX AS REQUIRED U/S.151 OF THE IT.A.CT, 1961. THERE IS NO EVIDENCE FILED TO SUPPORT THE CLAIM NOR HAS ANY EVIDENCE BEEN FILED THAT THIS WAS RAISED BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS. HENCE T HE GROUNDS OF APPEAL NO. 1 IS DISMISSED. 7. THE SECOND GROUND OF APPEAL IS IN RESPECT OF ALLEGATION THAT THE SERVICE OF NOTICE BY AFFIXTURE WAS DEFECTIVE. THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT NOTICE U/S.148 DATED 10.03.2014 WAS SERVED THROUGH WARD INSPECTOR BY AFFIXTURE ON THE ADDRESS MENTIONED IN I. T. RETURN. FURTHER, SUBSEQUENT NOTICE WERE ALSO SERVED ON ONE OF THE DIRECTOR OF THE APPELLANT COMPANY SHRI NILESH JOSHI AT HIS KALAMBOLI ADDRESS. THERE IS NO COMMUNICATION OR EVIDENCE THAT APPELLANT HAD RAISED ANY OBJECTION TO THE SERVICE OF THE NOTICE IN THE ASSESSMENT PROCEEDINGS. EVEN OTHERWISE AS PER SECTION 292BB, WHERE THE ASSESSEE HAS COOPERATED WITH ANY ENQUIRY RELATING TO ANY ASSESSMENT OR REASSESSMENT IT SHALL BE DEEMED THAT ANY N OTICE UNDER THE PROVISION OF ACT WHICH IS REQUIRED TO BE SERVED UPON THE ASSESSEE HAS BEEN DULY SERVED IN ACCORDANCE WITH THE PROVISION OF THIS ACT. FURTHER, ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR ENQUIRY UNDER THE ACT T HAT THE NOTICE WAS NOT SERVED IN TIME OR NOT SERVED IN ANY PROPER MANNER. IN THIS FACT AND LAW, GROUND OF APPEAL NO.2 IS DISMISSED. 6. AS REGARDS THE MERITS OF THE CASE, LEARNED CIT(A) HELD AS UNDER: - 8. GROUNDS OF APPEAL NO. 3 AND 4 ARE IN RESPECT OF ADDITION IN RESPECT OF BOGUS PURCHASES OF RS. 1,02,11,397/ - . THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) TO THE THREE IMPUGNED HAWALA PARTIES. HOWEVER, NOTICE COULD NOT BE SERVED SINCE PARTIES DID NOT EXIST AT THE GIVEN ADDRESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUMMONS WERE ISSUED TO THE DIRECTOR SHRI NILESH ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 6 JOSHI WHO HAD SIGNED THE BALANCE SHEET OF THE ASSESSEE COMPANY FOR AY 2009 - 10. DIRECTOR SHRI NILESH JOSHI ADMITTED THAT HE HAD SIGNED TH E BALANCE SHEET BUT STATED THAT ALL THE AFFAIRS OF THE COMPANY WERE LOOKED AFTER BY SHRI RAJIV BAJPAI, THE OTHER DIRECTOR AND HENCE HE WAS NOT ABLE TO COMMENT ON THE ISSUE. THOUGH HE PROMISED TO FURNISH LATEST ADDRESS OF SHRI RAJIV BAJPAI BUT HE DID NOT FU RNISH THE SAME. NONE OF THE OTHER DIRECTORS APPEARED BEFORE ASSESSING OFFICER. THE APPELLANT WAS NOT ABLE TO SUBSTANTIATE THE GENUINENESS OF THE CLAIM OF THE PURCHASES FROM THE THREE IMPUGNED HAWALA PARTIES. THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE PURCHASES CLAIMED OF RS.1,02,11,397/ - . 9. I FIND THAT THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE BEFORE ME TO REBUT THE CONCLUSION OF THE ASSESSING OFFICER. THE BUSINESS OF THE APPELLANT IS TRADING OF DRUGS AND MEDICINES. THERE IS NO REASON WHY APPELLA NT SHOULD HAVE FAILED TO PRODUCE ORIGINAL BILLS, INVOICES, DELIVERY CHALLANS IN RESPECT OF THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THREE PARTIES. THE DIRECTORS OF THE APPELLANT HAVE AVOIDED APPEARING BEFORE THE ASSESSING OFFICER. EVEN IN THE APPELLATE PROCEEDINGS, THE APPELLANT HAS SOUGHT SEVERAL ADJOURNMENTS BUT FURNISHED NOTHING TO SUPPORT THE GROUNDS OF APPEAL. IT HAS BEEN HELD BY HON'BLE SUPREME COURT IN THE CASE OF B.N. BHATTACHARGEE 85 OTHERS IN 118 ITR 461 (SC) THAT APPEAL DOES NOT MEAN ONLY FIL ING OF MEMO, BUT ALSO PURSUING IT EFFECTIVELY. IN CASE WHERE THE A S SESSEE DOCS NOT TO PURSUE THE APPEAL, APPELLATE AUTHORITY HAVE INHERENT RIGHT TO DISMISS THE APPEAL FOR NON - PROSECUTION. ALSO IN THE LIGHT OF DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF M/S CHEMIPOL VS. UNION OF INDIA IN EXCISE APPEAL NO.62 OF 2009 AND IN THE CASES OF JAWAHARNAGAR CO - OP HSG. SOC. LTD. VS. ITO 24(3)(4) ITA NO.4666/MUM/ 2010 ORDER DT. 26.7.2011 AND M/S FLAT COATERS (I) LTD. VS. ITO 10(3)(4) IN ITA NO.863/MUM/ 2010 ORDER DT. 27.7.2011, THIS APPEAL DESERVES DISMISSAL, IN THIS CIRCUMSTANCES THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS UPHELD. ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 7 7. AGAINST THE ABOVE ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 8. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. IT IS ALSO NOTED THAT ASSESSEE HAS ALSO NOT APPEARED BEFORE THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE PROCEED TO ADJUDICATE THE ISSUE BY HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. 9. WE 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 OBT AIN BOGUS BILLS. ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATION ENTRY / BOGUS PURCHASE BILLS DURING THE CONCERNED ASSESSMENT YEAR FROM DIFFERENT PARTIES. BASED UPON THE INFORMATION ASSESSMENT WAS REOPENED. THE CREDIBILITY OF INFORMATION RELATING TO REOPENI NG REMAINS UNCONTROVERTED . 10. AS REGARDS THE REOPENING OF THE ASSESSEE, O N A CAREFUL CONSIDERATION , WE NOTE THAT IN THIS CASE INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER FROM DGIT INVESTIGATION (MUMBAI) THERE ARE SOME PARTIES WHO ARE ENGAGED IN TH E HAWALA TRANSACTIONS AND ARE ALSO INVOLVED IN ISSUING BOGUS PURCHASE BILLS FOR SALE OF MATERIAL WITHOUT DELIVERY OF GOODS, WHICH INFORMATION WAS BASED ON INFORMATION RECEIVED BY REVENUE FROM MAHARASHTRA SALES TAX AUTHORITY. INFORMATION WAS RECEIVED THAT T HE ASSESSEE WAS BENEFICIARY OF HAWALA ACCOMMODATION ENTRIES FROM ENTRY PROVIDERS BY WAY OF BOGUS PURCHASE. THE ACCOMMODATION ENTRY PROVIDER HAS DEPOSED AND ADMITTED BEFORE THE MAHARASHTRA SALES TAX AUTHORITY VIDE STATEMENT/ AFFIDAVIT THAT ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 8 THEY WERE ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES WHEREIN BOGUS SALE BILLS WERE ISSUED WITHOUT DELIVERY OF GOODS, IN CONSIDERATION FOR COMMISSION. THESE, ACCOMMODATION ENTRY PROVIDERS, ON RECEIPT OF CHEQUES FROM PARTIES AGAINST BOGUS BILLS FOR SALE OF MATERIAL, LA TER ON WITHDREW CASH FROM THEIR BANK ACCOUNTS , WHICH WAS RETURNED TO BENEFICIARIES OF BOGUS BILLS AFTER DEDUCTION OF THEIR AGREED COMMISSION. THE ASSESSEE WAS STATED TO BE ONE OF THE BENEFICIARIES OF THESE BOGUS ENTRIES OF SALE OF MATERIAL FROM HAWALA ENTR Y 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 THE 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 TH E ASSESSEE IS STATED TO BE BENEFICIARY OF BOGUS PURCHASE BILLS . 11. FROM THE ABOVE, WE 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 BOGU S 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 INFOR MATION, 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 THE SAME IS NOT REQUIRED TO BE PROVED TO ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 9 THE GUILT. IN THIS REGARD, WE REFER TO THE DECISION OF THE H ON'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 ASSESS 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 BELI EVE 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 TH E 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 RELEVANT TIME) FULFILLMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT TH AT 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 ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHE THER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE AO IS WITHI N 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 ITR 34 (SUPREME COURT). 1 2 . THE ABOVE DISCUSSION AND PRECEDENT FROM APEX COURT FULLY JUSTIFY THE VALIDITY OF REOPENING IN THIS CASE. FURTHER WE FIND THAT THE LD. CIT(A) HAS CAREFULLY EXAMINED THE OTHER ASPECTS TO THE CHALLENGE OF VALIDITY OF REOPENING ISSUE AND HAS PROPERLY APPRECIA TED THE ISSUE. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 10 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 THE ASSESSEES CASE. 13 . AS REGARDS THE MERITS OF THE CASE, WE FIND THAT COGENT INFORMATION HAS BEEN RECEIVED FROM THE SALES TAX DEPARTMENT THAT THE PURCHASES BOOKED BY THE ASSESSEE ARE FROM BOGUS SUPPLIERS. IN SUCH FACTUAL S CENARIO THE ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY CONFIRMATION FROM ANY OF THE PARTY. ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NECESSARY EVIDENCE RELATING TO TRANSPORTATION OF THE GOODS WAS ALSO NOT ON RECORD. IN THIS FACTUAL SCENARIO IT IS AMPLY CLEAR THAT ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS. MERE PREPARATION OF DOCUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELM ING EVIDENCE THAT THE PROVIDER OF THESE BILLS ARE BOGUS AND NON - EXISTENT. 14 . THE SALES TAX DEPARTMENT IN ITS ENQUIRY HAVE FOUND THAT PARTIES TO BE PROVIDING BOGUS ACCOMMODATION ENTRIES. THE ASSESSING OFFICER ALSO ISSUED NOTICES TO THESE PARTIES AT THE A DDRESSES PROVIDED BY THE ASSESSEE. ALL THESE NOTICES H AVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN 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 HAS BEEN ABLE TO PRODUCE ANY CONFIRMATION FROM THESE PAR TIES. IN SUCH CIRCUMSTANCES , THERE IS NO DOUBT THAT THESE PARTIES ARE NON - EXISTENT. WE FIND IT FURTHER STRANGE THAT ASSESSEE WANTS THE REVENUE TO PRODUCE ASSESSEES OWN VENDERS, WHOM THE ASSESSEE COULD NOT PR ODUCE. THE PURCHASE BILLS FROM THESE NON - EXISTENT / BOGUS PARTIES CANNOT BE TAKEN AS COGENT EVIDENCE OF PURCHASES. I N LIGHT OF ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 11 THE OVERWHELMING EVIDENCE THE REVENUE AUTHORITIES CANNOT PUT UPON BLINKERS AND ACCEPT THESE PURCHASES AS GENUINE. THIS PROPOSITIO N IS DULY SUPPORTED BY HONBLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL 214 ITR 801 AND DURGA PRASAD M ORE 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 IGN ORED AND ONLY THE DOCUMENTS BEING PRODUCED SHOULD BE CONSIDERED. THIS PROPOSITION IS TOTALLY UNSUSTAINABLE IN LIGHT OF ABOVE A PEX C OURT DECISIONS. 1 5 . WE FURTHER FIND THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ ENTERPRISES HAS UPHELD 100% ALLOWANCE FOR THE PURCHASES WHEN THE SALES HAVE NOT BEEN DOUBTED. HOWEVER, THE FACTS OF THAT CASE WERE DIFFERENT. FURTHERMORE, THE SALES IN THAT CASE WER E BASICALLY TO GOVERNMENT DEPARTMENTS. HENCE THE RATIO FROM THIS DECISION IS NOT APPLICABLE ON THE FACTS OF THE CASE. 17 . IN THESE CIRCUMSTANCES LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF APE X A PPEAL N O . 240 OF 2003 IN THE C ASE 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 TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASE S 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 . ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 12 1 8 . WE FURTHER NOTE THAT HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT JAIPUR V. M/S.SHRUTI GEMS IN ITA NO.658/2009 VIDE ORDER DATED 23.05.2017 HAS INTER ALIA REFERRED TO THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN ITA NO.234/2008 IN CASE OF CIT J AIPUR V. ADITYA GEMS FOR THE FOLLOWING DECISION: - 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 BY THE SUPREME COURT HAS DISMISSED THE SLP CONFINED 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 LT D. VS. DY. C.I.T, TAX APPEAL NO.240/2003 DECIDED ON 20.06.2016, THE PARTIES ARE BOUND BY THE PRINCIPLE OF LAW PRONOUNCED IN THE AFORESAID THREE JUDGMENTS. 1 9 . IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT, SINCE IT HAS BEEN FOUND THAT THESE PUR CHASES ARE BOGUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A). ACCORDINGLY, WE UPHOLD THE SAME. 20 . IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON THIS 16 TH DAY OF OCTOBER , 2017. SD/ - SD/ - ( SANDEEP GOSAIN ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 16.10. 2017 . DEVDAS* ITA NO. 7224 /MUM/20 16 . M/S. RA BIOTECH PRIVATE LIMITED. 13 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE.