RADHEY SHYAM, NEW DELHI V. ITO, WARD- 63(3), NEW DELHI

ITA 7387/DEL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6718 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: VED JAIN SHRI ASHISH GOEL
• Keywords: Bogus purchase; Deemed to accrue or arise in india; Accommodation entries
• Section: 69C; 40A(3); 153A; 147; 148; 12; 144; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.7387/DEL./2017 ASSESSMENT YEAR 2007-2008 SHRI RADHEY SHYAM, PROP. M/S. RADHEY SHYAM & CO. 5645, BASTI HARPHOOL SINGH, SADAR BAZAR, DELHI-006. PAN ABHPS9513Q VS. THE INCOME TAX OFFICER, WARD-63(3), NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI VED JAIN, ADVOCATE SHRI ASHISH GOEL, C.A. & SHRI RISHABH JAIN, C.A. FOR REVENUE : SHRI S.L. ANURAGI, SR. D.R. DATE OF HEARING : 0 5 .0 7 .2018 DATE OF PRONOUNCEMENT : 09 .0 7 .2018 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-18, NEW DELHI, DATED 17 .10.2017, FOR THE A.Y. 2007-2008, CHALLENGING THE REOPENING OF TH E ASSESSMENT UNDER SECTION 148 OF THE I.T. ACT, 1961 AND ADDITION OF RS.14,28,895/- ON ACCOUNT OF BOGUS PURCHASES. 2 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT RETURN OF INCOME DECLARING AN INCOME OF RS.1,36,180/- WAS FILED WHIC H WAS PROCESSED U/S 143(1) OF 1 TAX ACT. LATER ON. INFORM ATION WAS RECEIVED FROM ACIT, CENTRAL CIRCLE, THROUGH THE O/O . CIT WAS PROVIDED TO THE A.O, THE LIST OF PARTIES TO WHOM THE BOGUS PURCHASES/ACCOMMODATION ENTRIES PROVIDED BY SHRI RA KESH GUPTA, SHRI VISHESH GUPTA, SHRI NAVNEET JAIN AND SHRI VAIBHAV JAIN WAS APPEARING. AFTER GOING THROUGH THE COMPLETE LIST AND IDENTIFYING THE PARTIES AND AFTER RECORDING THE REASONS THAT THE INCOME OF RS.14,28,895/- HAS ESCAPED ASSES SMENT IN THE CASE OF ASSESSEE, THE CASE WAS REOPENED. THE AS SESSEE DID NOT PRODUCE BOOKS OF ACCOUNT. THE A.O. AFTER COLLEC TING ALL MATERIAL ON RECORD, CALLED FOR THE EXPLANATION OF A SSESSEE IN RESPECT OF ACCOMMODATION ENTRIES RECEIVED FROM THE ABOVE PERSONS. THE A.O. ISSUED SHOW CAUSE NOTICE TO THE A SSESSEE THAT ACCOMMODATION ENTRIES HAVE BEEN RECEIVED BY ASSESSE E THROUGH THE ABOVE PERSONS FROM OM AGENCIES, VISHY TRADING C O. AND SHREE SHYAM TRADING CO. OF RS.14,28,895/- WHICH ARE BOGUS PURCHASES. THE ASSESSEE EXPLAINED BEFORE A.O. THAT ASSESSEE 3 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. MADE GENUINENE PURCHASES FROM THESE PARTIES AND THA T SIMILAR ADDITION WAS MADE IN A.Y. 2006-2007 IN WHICH LD. CI T(A) HAS RESTRICTED THE ADDITION OF 20% OF THE PURCHASES. TH E A.O. HOWEVER, DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND MADE THE ADDITION OF RS.14,28,895/- ON ACCOUNT OF BOGUS PURCHASES OBTAINED BY THE ASSESSEE THROUGH THE ABOVE FOUR PER SONS NAMELY SHRI RAKESH GUPTA AND OTHERS. 3. THE ASSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT AS WELL AS ADDITION ON MERIT BEFORE THE LD. CIT(A). THE SUBMISSIONS OF THE ASSESSEE WERE REPRODUCED IN THE APPELLATE ORDER. IT WAS ALSO CONTENDED THAT SIMILAR ISSUES HAVE BEEN DECIDED BY ITAT IN PRECEDING A.Y. 2006-2007 AN D REOPENING HAVE BEEN QUASHED AND ADDITION ON MERIT H AVE BEEN DELETED. THE LD. CIT(A), HOWEVER, DID NOT ACCEPT TH E CONTENTION OF ASSESSEE AND ALSO DID NOT FOLLOW THE ORDER OF TH E TRIBUNAL. THE APPEAL OF ASSESSEE HAS BEEN DISMISSED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OU TSET, SUBMITTED THAT THE ISSUE IS COVERED BY THE ORDER OF ITAT, DELHI 4 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. BENCH IN ASSESSEES OWN CASE FOR THE A.Y. 2006-2007 IN ITA.NO.1429/DEL./2015 DATED 30.11.2015 WHEREBY THE REOPENING OF THE ASSESSMENT HAVE BEEN QUASHED AND A DDITION ON MERIT HAVE BEEN DELETED. THE ORDER OF THE TRIBUN AL IS REPRODUCED AS UNDER : IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-1 NEW DELHI BEFORE SHRI P.K. BANSAL : ACCOUNTANT MEMBER ITA NO. 1429/DEL/2015 ASSTT. YRS: 2006-07 RADHEY SHYAM & CO., VS. INCOME-TAX OFFICER, PROP. RADHEY SHYAM, WARD-39(3), NEW DELHI. 5645, BASTI HARPHOOL SINGH, SADAR BAZAR, DELHI. PAN: ABHPS 9513 Q ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI VED JAIN FCA RESPONDENT BY : SHRI P. DAM KANUNJNA SR. DR DATE OF HEARING : 13/11/2015. DATE OF ORDER : 30/11/2015. O R D E R THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE CIT(A) DATED 15/12/2014, PASSED U/S 144 READ WITH S ECTION 147 OF THE INCOME- TAX ACT, 1961, UPHOLDING THE REASSESSMENT ORDER PAS SED U/S 148 AND ON MERITS 5 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. THE CIT(A) REDUCED THE ADDITION TO RS. 94,771/- AS AGAINST RS. 47,73,855/-, MADE BY THE AO. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED THE RETURN DECLARING AN INCOME OF RS. 1,24,182/-, WHICH WAS COMPLETED U/S 1 43(3). SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED ON THE ALLEGATION THAT THE ASSESSEE HAD MADE BOGUS PURCHASES. THE ASSESSMENT WAS COMPLETED BY THE AO B Y MAKING ADDITION OF RS. 4,73,855/-, TREATING THE ENTIRE PURCHASES MADE BY THE ASSESSEE FROM M/S SHREE BANKEY BIHARI TRADING COMPANY, TO BE THE ACCO MMODATION ENTRIES. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). T HE CIT(A) UPHELD THE VALIDITY OF THE REASSESSMENT, BUT REDUCED THE ADDIT ION TO 20% OF THE PURCHASES, AMOUNTING TO RS. 94,771/-. 4. THE ISSUES INVOLVED IN VARIOUS GROUNDS TAKEN BY THE ASSESSEE RELATE TO THE VALIDITY OF THE REASSESSMENT AS WELL AS THE SUS TENANCE OF THE ADDITION TO THE EXTENT OF 20%. SO FAR AS THE VALIDITY OF THE ASSESS MENT IS CONCERNED, I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. I NOTED THAT THE ASSESSMENT HAS BEEN REOPENED BY THE AO BY RECORDING THE FOLLOWING REASONS: REASONS FOR THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF M/S RADHAY SHYAM & CO. FO R THE ASSESSMENT YEAR 2006-07 A LETTER BEARING F.NO. ADDI.CIT/(HQ)/(COORD.)/ ACCOMMODATION ENTRY/2012-13/15016 DATED 26-03-2013 6 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. WAS RECEIVED FROM THE OFFICE OF THE CHIEF COMMISSIO NER OF I. TAX, DELHI-I, NEW DELHI THEREIN FORWARDING LE TTER BEARING F. NO. CIT(C)-1I/2012-13/3898 DATED 19.03.2 013 RECEIVED FROM THE COMMISSIONER OF I. TAX, CENTRAL-I I, NEW DELHI ALONG WITH A CD CONTAINING THE DETAILS OF ACCOMMODATION ENTRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & VAIBHAV J AIN AND DIRECTING THIS OFFICE TO TAKE NECESSARY ACTION AS PER SECTION 148 IN RESPECT OF ENTRIES PERTAINING TO A. Y. 2006- 07, WHICH IS TIME BARRING ON 31.03.2013. THE INFORMATION PROVIDED BY THE CIT, CENTRAL-II, NE W DELHI VIDE HIS LETTER DATED 19.03.2013 READS AS UN DER :- 'KINDLY FIND ENCLOSED HEREWITH LETTER DATED 13.03.2 013 OF ACIT, CENTRAL CIRCLE-10 DULY FORWARDED BY THE ADDL. CIT, CENTRAL RANGE-IV, ALONG WITH ITS ENCLOSURES ON THE SUBJECT MENTIONED ABOVE. 2. THE ASSESSMENT OF SEARCH CASES OF SH. RAKESH GUPTA, SH. VISHESH GUPTA, SH. NAVNEET JAIN & SH. VAIBHAV JAIN ARE UNDER PROCESS WITH THE ACIT, CENTR AL CIRCLE-10. DURING THE ASSESSMENT PROCEEDINGS U/S 15 3A IN THE AFORESAID CASES, DETAILS REGARDING ACCOMMODATIO N ENTRIES GIVEN BY THE ABOVE ENTRY PROVIDERS HAS BEEN OBTAINED BY THE A.D. 7 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. 3. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS HAS BEEN OBTAINED FROM SH. RAKESH GUPTA AND SH. VISHESH GUPT A. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXURE A, DU LY SIGNED BY SH. VISHESH GUPTA. THE LIST GIVES THE NAME OF THE FIRM WHICH HAS PROVI DED THE ACCOMMODATION ENTRY ALONG WITH THE NAME AND ADDRESS OF THE RECIPIENTS OF ACCOMMODATION ENTRY. 4. SH. NAVNEET JAIN & SH. VAIBHAV JAIN HAS PROVIDE D ACCOMMODATION ENTRY THROUGH THIRTY-SEVEN PAPER ENTI TIES. THE LIST OF THE FIRMS GIVING ACCOMMODATION ENTRY IS ENCLOSED AS ANNEXURE-B. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS, HAS BEEN OBTAINED FROM SH. NAVENEET JAI N & SH. VAIBHAV JAIN. IT DOES NOT GIVE YEAR WISE BIFURC ATION. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXURE-C, DU LY SIGNED BY SH. VAIBHAV JAIN. THUS, THE FIRMS MENTION IN THE LIST 'B' HAVE PROVIDED ACCOMMODATION ENTRIES TO THE FIRMS MENTIONED IN LIST 'C'. 5. THE SOFT COPY OF THE INFORMATION IN RESPECT TO ANNEXURE A, B & C IS ALSO ENCLOSED. 6. THE INFORMATION OF ACCOMMODATION ENTRY INCLUDES A.Y. 2006-07 ALSO, WHICH IS A TIME BARRING YEAR FOR TAKING ACTION U/S 148. 8 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. 7. THIS INFORMATION IS FORWARDED TO YOU FOR EARLY DISSEMINATION TO VARIOUS FIELD OFFICES IN DELHI (SO FT COPY ALSO ENCLOSED).' ON EXAMINING THE LIST OF ACCOMMODATION ENTRIES PROV IDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH. VAIBHAV JAIN PERTAINING TO A.Y. 2006- 07, IT IS NOTICED THAT THE FOLLOWING ACCOMMODATION ENTRIES HAVE BEEN TAKEN BY THE ASSESSEE NAMELY M/S RADHAY SHYAM & CO.:- SL. NO. ACCOMMODATION ENTRY PROVIDED BY NAME OF PARTY TO WHOM ACCOMMODATION ENTRY IS PROVIDED AMOUNT OF ACCOMMODATION ENTRY 1. SHREE BANKEY BIHARI TRADING CO. M/S RADHAY SHYAM & CO. RS. 4,73,855/- TOTAL AMOUNT OF ENTRIES= RS. 4,73,855/ - SINCE SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH. VALBHAV JAIN DURING THE COURSE O F ASSESSMENT PROCEEDINGS U/S 153A OF I. TAX ACT HAVE ADMITTED THAT THEY HAVE GIVEN ACCOMMODATION ENTRIES TO THE PARTIES WHOSE LISTS HAVE BEEN PROVIDED BY THEM TO THE ACIT, CENTRAL CIRCLE-10, NEW DELHI, THEREFORE, IT I S FAIR TO CONCLUDE THAT M/S RADHAY SHYAM & CO., WHOSE NAME IS APPEARING IN THE SAID LIST, HAS TAKEN ACCOMMODATION ENTRIES FROM SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH. VAIBHAV JAIN PERTAINING TO AY. 2 006- 07. 9 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THA T INCOME CHARGEABLE TO TAX OF M/S RADHAY SHYAM & CO. AMOUNTI NG TO RS. 4,73,855/- FOR THE F.Y. 2005-06 RELEVANT TO AY. 2006-07 HAS ESCAPED ASSESSMENT AND IT IS A FIT CASE FOR INITIATION OF PROCEEDINGS U/S 147 OF THE ACT. PROPOSAL IN THE PRESCRIBED FORM FOR THE AY. 2006-07 (F. Y. 2005-06) IS SUBMITTED HEREWITH FOR KIND CONSIDER ATION AND NECESSARY APPROVAL U/S 151(2) OF THE I. TAX ACT , 1961 AS THE SAME IS GETTING BARRED BY LIMITATION ON 31/3 /2013. IF APPROVED, NOTICE U/S 148 OF THE ACT MAY BE ISSUE D. SD/- 28.3.2013 (PAWAN KUMAR VASHIST) INCOME TAX OFFICER WARD-39(3), NEW DELHI. 5. I FOUND THAT THE ISSUE REGARDING THE VALIDITY OF THE REASSESSMENT IS DULY COVERED BY THE DECISION OF THIS BENCH IN TH E CASE OF UNIQUE METAL INDUSTRIES VS. ITO IN ITA NO. 1372/DEL/2015 I N WHICH THIS TRIBUNAL VIDE ITS ORDER DATED 28-1-2015 QUASHED THE REASSESSMENT. I NOTED THAT IN THAT CASE ALSO SIMILAR TYPE OF REASON S WERE RECORDED, AS REPRODUCED BELOW: REASONS FOR THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF M/S RADHAY SHYAM & CO. FO R THE ASSESSMENT YEAR 2006-07 10 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. A LETTER BEARING F.NO. ADDI.CIT/(HQ)/(COORD.)/ ACCOMMODATION ENTRY/2012-13/15016 DATED 26-03-2013 WAS RECEIVED FROM THE OFFICE OF THE CHIEF COMMISSIO NER OF I. TAX, DELHI-I, NEW DELHI THEREIN FORWARDING LE TTER BEARING F. NO. CIT(C)-1I/2012-13/3898 DATED 19.03.2 013 RECEIVED FROM THE COMMISSIONER OF I. TAX, CENTRAL-I I, NEW DELHI ALONG WITH A CD CONTAINING THE DETAILS OF ACCOMMODATION ENTRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & VAIBHAV J AIN AND DIRECTING THIS OFFICE TO TAKE NECESSARY ACTION AS PER SECTION 148 IN RESPECT OF ENTRIES PERTAINING TO A. Y. 2006- 07, WHICH IS TIME BARRING ON 31.03.2013. THE INFORMATION PROVIDED BY THE CIT, CENTRAL-II, NE W DELHI VIDE HIS LETTER DATED 19.03.2013 READS AS UN DER :- 'KINDLY FIND ENCLOSED HEREWITH LETTER DATED 13.03.2 013 OF ACIT, CENTRAL CIRCLE-10 DULY FORWARDED BY THE ADDL. CIT, CENTRAL RANGE-IV, ALONG WITH ITS ENCLOSURES ON THE SUBJECT MENTIONED ABOVE. 2. THE ASSESSMENT OF SEARCH CASES OF SH. RAKESH GU PTA, SH. VISHESH GUPTA, SH. NAVNEET JAIN & SH. VAIBHAV J AIN ARE UNDER PROCESS WITH THE ACIT, CENTRAL CIRCLE-10. DURING THE ASSESSMENT PROCEEDINGS U/S 153A IN THE AFORESAID CASES, DETAILS REGARDING ACCOMMODATION EN TRIES 11 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. GIVEN BY THE ABOVE ENTRY PROVIDERS HAS BEEN OBTAINE D BY THE A.O. 3. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS HAS BEEN OBTAINED FROM SH. RAKESH GUPTA AND SH. VISHESH GUPT A. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXURE A, DU LY SIGNED BY SH. VISHESH GUPTA. THE LIST GIVES THE NAM E OF THE FIRM WHICH HAS PROVIDED THE ACCOMMODATION ENTRY ALONG WITH THE NAME AND ADDRESS OF THE RECIPIENTS O F ACCOMMODATION ENTRY. 4. SH. NAVNEET JAIN & SH. VAIBHAV JAIN HAS PROVIDE D ACCOMMODATION ENTRY THROUGH THIRTY-SEVEN PAPER ENTI TIES. THE LIST OF THE FIRMS GIVING ACCOMMODATION ENTRY IS ENCLOSED AS ANNEXURE-B. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS, HAS BEEN OBTAINED FROM SH. NAVENEET JAI N & SH. VAIBHAV JAIN. IT DOES NOT GIVE YEAR WISE BIFURC ATION. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXURE-C, DU LY SIGNED BY SH. VAIBHAV JAIN. THUS, THE FIRMS MENTION IN THE LIST 'B' HAVE PROVIDED ACCOMMODATION ENTRIES TO THE FIRMS MENTIONED IN LIST 'C'. 5. THE SOFT COPY OF THE INFORMATION IN RESPECT TO ANNEXURE A, B & C IS ALSO ENCLOSED. 6. THE INFORMATION OF ACCOMMODATION ENTRY INCLUDES A.Y. 2006-07 ALSO, WHICH IS A TIME BARRING YEAR FOR TAKING ACTION U/S 148. 12 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. 7. THIS INFORMATION IS FORWARDED TO YOU FOR EARLY DISSEMINATION TO VARIOUS FIELD OFFICES IN DELHI (SO FT COPY ALSO ENCLOSED).' ON EXAMINING THE LIST OF ACCOMMODATION ENTRIES PROV IDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH. VAIBHAV JAIN PERTAINING TO A.Y. 2006- 07, IT IS NOTICED THAT THE FOLLOWING ACCOMMODATION ENTRIES HAVE BEEN TAKEN BY THE ASSESSEE NAMELY M/S UNIQUE M ETAL INDUSTRIES:- SL. NO. ACCOMMODATION ENTRY PROVIDED BY NAME OF PARTY TO WHOM ACCOMMODATION ENTRY IS PROVIDED AMOUNT OF ACCOMMODATION ENTRY 1. SHREE SHYAM TRADING CO. M/S UNIQUE METAL INDUSTRIES RS. 2,44,399/- 2. VISHNU TRADING CO. M/S UNIQUE METAL INDUSTRIES RS. 8,12,542/- 3. SHREE BANKEY BIHARI M/S UNIQUE METAL INDUSTRIES RS. 3,28,368/- TOTAL AMOUNT OF ENTRIES= RS. 13,85,309/ - SINCE SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH. VALBHAV JAIN DURING THE COURSE O F ASSESSMENT PROCEEDINGS U/S 153A OF I. TAX ACT HAVE ADMITTED THAT THEY HAVE GIVEN ACCOMMODATION ENTRIES TO THE PARTIES WHOSE LISTS HAVE BEEN PROVIDED BY THEM TO THE ACIT, CENTRAL CIRCLE-10, NEW DELHI, THEREFORE, IT I S FAIR TO CONCLUDE THAT M/S RADHAY SHYAM & CO., WHOSE NAME IS APPEARING IN THE SAID LIST, HAS TAKEN ACCOMMODATION ENTRIES FROM SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. 13 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. NAVNEET JAIN & SH. VAIBHAV JAIN PERTAINING TO AY. 2 006- 07. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THA T INCOME CHARGEABLE TO TAX OF M/S RADHAY SHYAM & CO. AMOUNTI NG TO RS. 4,73,855/- FOR THE F.Y. 2005-06 RELEVANT TO AY. 2006-07 HAS ESCAPED ASSESSMENT AND IT IS A FIT CASE FOR INITIATION OF PROCEEDINGS U/S 147 OF THE ACT. PROPOSAL IN THE PRESCRIBED FORM FOR THE AY. 2006-07 (F. Y. 2005-06) IS SUBMITTED HEREWITH FOR KIND CONSIDER ATION AND NECESSARY APPROVAL U/S 151(2) OF THE I. TAX ACT , 1961 AS THE SAME IS GETTING BARRED BY LIMITATION ON 31/3 /2013. IF APPROVED, NOTICE U/S 148 OF THE ACT MAY BE ISSUE D. SD/- 28.3.2013 (PAWAN KUMAR VASHIST) INCOME TAX OFFICER WARD-39(3), NEW DELHI. 6. SINCE IN THE CASE OF UNIQUE METAL INDUSTRIES (S UPRA), SIMILAR REASONS WERE RECORDED, AS HAVE BEEN RECORDED IN THE CASE OF THE ASSESSEE AND THE PARTY FROM WHICH THE ASSESSEE MADE THE PURC HASES WERE SHRI BANKEY BIHARI TRADING CO., WHICH IS A PARTY IN THE CASE OF THE ASSESSEE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HIS TRIBUNAL DATED 28- 1-2015 IN THE CASE OF UNIQUE METAL INDUSTRIES (SU PRA), I QUASH THE REASSESSMENT. 14 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. 7. NOW COMING TO THE MERIT ABOUT THE SUSTENANCE OF THE ADDITION BY THE CIT(A) @ 20% OF THE PURCHASES MADE BY THE ASSES SEE FROM SHRI BANKEY BIHARI TRADING CO., AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROUGH THE ORDER OF THE TRIBUNAL, I NOTED THAT THI S TRIBUNAL VIDE ITS ORDER DATED 28-10-2015 IN THE CASE OF UNIQUE METAL INDUS TRIES (SUPRA), DELETED SIMILAR ADDITION BY OBSERVING IN PARA 27 AS UNDER: 27. AS REGARDS THE ADDITION OF 20% SUSTAINED BY TH E LEARNED CIT(A) I AM OF THE VIEW THAT SINCE PURCHASE S ARE NOT BOGUS THE ADDITION ON THIS ACCOUNT CANNOT BE SU STAINED. EVEN OTHERWISE THE ADDITION OF 20% ON THE FACTS AND CIRCUMSTANCES IS APPARENTLY TOO HIGH. THE LEARNED C IT(A) HAVING HELD THAT TAX HAS TO BE LEVIED ON REAL INCOM E AND THE PROFIT CANNOT BE ASCERTAINED WITHOUT DEDUCTING THE COST OF PURCHASES FROM THE SALES AS OTHERWISE IT AMOUNT TO LEVY OF TAX ON GROSS RECEIPT, SHE OUGHT TO HAVE APPLIED' PROFIT RATE IN THIS NATURE OF TRADE. ESTIMATING PROFIT AT THE RATE OF 20% BY TAKING INTO CONSIDERATION THE OR VISIONS OF SECTION 40A(3) WILL NOT LEAD TO DETERMINATION OF CORRECT RE AL INCOME. SECTION 40A(3) IS MEANT FOR A DIFFERENT PUR POSE WHEN THE ASSESSEE HAS MADE PURCHASES IN CASH. THIS PROVISION CANNOT BE APPLIED IN SUCH CASES. ONCE THE PURCHASES ARE HELD TO BE BOGUS THEN THE TRADING RES ULTS DECLARED BY THE ASSESSEE CANNOT BE ACCEPTED AND RIG HT COURSE IN SUCH CASE IS TO REJECT BOOKS OF ACCOUNTS AND PROFIT HAS TO BE ESTIMATED BY APPLYING A COMPARATIV E PROFIT 15 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. RATE IN THE SAME TRADE. THOUGH THERE CAN BE A LITTL E GUESS WORK IN ESTIMATING PROFIT RATE BUT SUCH PROFIT RATE CANNOT BE PUNITIVE. 8. LD. DR EVEN THOUGH VEHEMENTLY RELIED ON THE ORDE R OF CIT(A) AS WELL AS THAT OF THE AO, BUT COULD NOT BRING TO OUR KNOWLEDGE ANY COGENT MATERIAL OR EVIDENCE WHICH MAY COMPEL US NOT TO FOL LOW THE DECISION OF THIS BENCH IN ITA NO. 1372/DEL/2015 (SUPRA). I, THE REFORE, RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF UNIQUE METAL INDUSTRIES (SUPRA), DELETE THE ADDITION AS SUSTAINE D BY THE LD. CIT(A) AMOUNTING TO RS.94,771/-. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/11/2015. SD/- (P.K. BANSAL ACCOUNTANT MEMBER DATED: 30/11/2015. 4.1. HE HAS SUBMITTED THAT THE TRIBUNAL IN THIS CA SE FOLLOWED ITS EARLIER ORDER IN THE CASE OF UNIQUE ME TAL INDUSTRIES VS. ITO IN ITA.NO.1372/DEL./2015 DATED 28.10.2015. HE HAS SUBMITTED THAT REASONS ARE SAME FOR INITIATION OF T HE RE- ASSESSMENT PROCEEDINGS AS WELL AS ADDITION IS SIMIL AR FOR MAKING ALLEGED BOGUS PURCHASES FROM THE SAME FOUR P ERSONS 16 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. VIZ., SHRI RAKESH GUPTA AND OTHERS IN PRECEDING ASS ESSMENT YEAR. THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE AS WELL AS IN THE CASE OF UNIQUE METAL INDUSTRIES (SUPRA). COPY O F THE REASONS FOR ASSESSMENT YEAR UNDER APPEAL I.E., A.Y. 2007-20 08 ARE FILED AT PAGE-16 AND 17 OF THE PAPER BOOK. THE SAME IS RE ADS AS UNDER : REASONS FOR THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF M/S RADHAY SHYAM & CO. FO R THE ASSESSMENT YEAR 2007-08. A LETTER BEARING F.NO. ADDI.CIT/(HQ)/(COORD.)/ ACCOMMODATION ENTRY/2012-13/15016 DATED 26-03-2013 WAS RECEIVED FROM THE OFFICE OF THE CHIEF COMMISSIO NER OF I. TAX, DELHI-I, NEW DELHI THEREIN FORWARDING LE TTER BEARING F. NO. CIT(C)-1I/2012-13/3898 DATED 19.03.2 013 RECEIVED FROM THE COMMISSIONER OF I. TAX, CENTRAL-I I, NEW DELHI ALONG WITH A CD CONTAINING THE DETAILS OF ACCOMMODATION ENTRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & VAIBHAV J AIN IN THE SHAPE OF BOGUS PURCHASES AND DIRECTING THIS OFFICE TO TAKE NECESSARY ACTION AS PER SECTION 148 IN RESPECT OF ENTRIES PERTAINING TO A.Y 2006-07, WHICH WERE GOING TO BE 17 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. BARRED BY LIMITATION ON 31.03.2013. THE INFORMATION PROVIDED BY THE CIT, CENTRAL-II, NEW DELHI VIDE HIS LETTER DATED 19.03.2013 READS AS UNDER : 'KINDLY FIND ENCLOSED HEREWITH LETTER DATED 13.03.2 013 OF ACIT, CENTRAL CIRCLE-10 DULY FORWARDED BY THE ADDL. CIT, CENTRAL RANGE-IV, ALONG WITH ITS ENCLOSURES ON THE SUBJECT MENTIONED ABOVE. 2. THE ASSESSMENT OF SEARCH CASES OF SH. RAKESH GUP TA, SH. VISHESH GUPTA, SH. NAVNEET JAIN & SH. VAIBHAV J AIN ARE UNDER PROCESS WITH THE ACIT, CENTRAL CIRCLE-10. DURING THE ASSESSMENT PROCEEDINGS U/S 153A IN THE AFORESAID CASES, DETAILS REGARDING ACCOMMODATION EN TRIES GIVEN BY THE ABOVE ENTRY PROVIDERS HAS BEEN OBTAINE D BY THE A.O. 3. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS HAS B EEN OBTAINED FROM SH. RAKESH GUPTA AND SH. VISHESH GUPT A. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXURE A, DU LY SIGNED BY SH. VISHESH GUPTA. THE LIST GIVES THE NAM E OF THE FIRM WHICH HAS PROVIDED THE ACCOMMODATION ENTRY ALONG WITH THE NAME AND ADDRESS OF THE RECIPIENTS O F ACCOMMODATION ENTRY. 4. SH. NAVNEET JAIN & SH. VAIBHAV JAIN HAS PROVIDED ACCOMMODATION ENTRY THROUGH THIRTY-SEVEN PAPER ENTI TIES. 18 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. THE LIST OF THE FIRMS GIVING ACCOMMODATION ENTRY IS ENCLOSED AS ANNEXURE-B. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS, HAS BEEN OBTAINED FROM SH. NAVENEET JAI N & SH. VAIBHAV JAIN. IT DOES NOT GIVE YEAR WISE BIFURC ATION. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXURE-C, DU LY SIGNED BY SH. VAIBHAV JAIN. THUS, THE FIRMS MENTION IN THE LIST 'B' HAVE PROVIDED ACCOMMODATION ENTRIES TO THE FIRMS MENTIONED IN LIST 'C'. 5. THE SOFT COPY OF THE INFORMATION IN RESPECT TO A NNEXURE A, B & C IS ALSO ENCLOSED. 6. THE INFORMATION OF ACCOMMODATION ENTRY INCLUDES A.Y. 2006-07 ALSO, WHICH IS A TIME BARRING YEAR FOR TAKI NG ACTION U/S 148. 7. THIS INFORMATION IS FORWARDED TO YOU FOR EARLY DISSEMINATION TO VARIOUS FIELD OFFICES IN DELHI (SO FT COPY ALSO ENCLOSED).' IT IS EVIDENT FROM THE ASSESSMENT ORDER PASSED BY T HE ACIT, CENTRAL CIRCLE-10, NEW DELHI ON 28.03.2013 THAT SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH. JAIBHAV JAIN DURING THE COURSE O F SEARCH PROCEEDINGS, IN POST SEARCH PROCEEDINGS AND IN ASSESSMENT PROCEEDINGS U/S 153A OF I. TAX ACT ADMITTED THAT THEY HAVE GIVEN ACCOMMODATION ENVIES TO THE PARTIES WHOSE LISTS HAVE BEEN PROVIDED BY TH EM 19 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. TO THE ACIT, CENTRAL CIRCLE-10, NEW DELHI. THEREFORE, THE ASSESSMENT OF THE FIRMS/CONCERNS/ INDIVIDUALS FOR A.Y. 2006-07, WHOSE NAMES WERE APPEARING IN THE SAID LIST OF ACCOMMODATION ENTRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA, SH. NAVNEET JAM & SH. VAIBHAV JAIN AND WHOSE TERRITORIAL JURISDICTION WAS LYING WITH THIS WARD, WERE REOPENED U/S. 147 OF I. TAX ACT AND NOTICES U/S. 14 8 OF I. TAX ACT WERE ISSUED. AFTER MAKING NECESSARY VERIFICATION AND DISPOSING O FF THE OBJECTIONS FILED BY MOST OF THE ASSESSEES AGAINST REOPEING OF THEIR CASES U/S. 147 OF I TAX ACT AND AFTER CONS IDERING THE REPLIES/DETAILS/DOCUMENTS FURNISHED BY THE ASSE SSEES IN THEIR RESPECTIVE CASES, INCLUDING THE CASE OF TH E ASSESSEE, IT WAS HELD THAT NO SATISFACTORY EXPLANATION ABOUT THE SOURCES OF BOGUS PURCHASES MADE FROM SH. RAKESH GUP TA AND SH. VISHESH GUPTA COULD BE FURNISHED. HENCE, KE EPING IN VIEW THE PROVISIONS OF SECTION 69C OF I. TAX ACT READ WITH SECTION 4, 5 AND 14 OF I. TAX ACT, THE AMOUNT OF SUCH BOGUS PURCHASES WERE TREATED AS DEEMED INCOME OF TH E ASSESSEE FOR A.Y. 2006-07. SINCE THE ACCOMMODATION ENTRIES PROVIDED BY SH. RAK ESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH . VAIBHAV JAIN IN THE SHAPE OF BOGUS PURCHASES WERE T REATED 20 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. AS DEEMED INCOME OF THE ASSESSEES FOR A Y. 2006-07 AND IN THE SAID LIST, NAMES OF THE CONCERNS/PERSONS WHO HAVE TAKEN ACCOMMODATION ENTRIES IN THE SHAPE OF BOGUS PURCHASES IN SUBSEQUENT ASSESSMENT YEARS WERE ALSO APPEARING, INCLUDING A.Y.2007-08. THEREFORE THIS OF FICE IS OF THE FIRM VIEW THAT THESE CASES ALSO NEED TO BE R EOPENED U/S 147 OF I. TAX ACT. ACCORDINGLY, ON EXAMINING THE LIST OF ACCOMMODATION ENTRIES PROVIDED BY SH RAKESH GUPTA & SH VISHESH GU PTA AND SH. NAVNEET JAIN &. SH. VAIBHAV JAIN PERTAINING TO A.Y 2007-08, IT IS NOTICED THAT THE FOLLOWING ACCOMMODATION ENTRIES HAVE BEEN TAKEN BY THE ASSESS EE NAMELY M/S RADHEY SHYAM & CO. IN A.Y. 2007-08 AND WHOSE TERRITORIAL JURISDICTION LIES WITH THIS WARD :- SL. NO. ACCOMMODATION ENTRY PROVIDED BY NAME OF PARTY TO WHOM ACCOMMODATION ENTRY IS PROVIDED AMOUNT OF ACCOMMODATION ENTRY 1. VISHUU TRADING CO. M/S RADHAY SHYAM & CO. RS. 4,28,115/- 2. OM AGENCIES M/S RADHAY SHYAM & CO. RS. 1,95,993/ - 3. SHREE SHYAM TRADING CO. M/S RADHAY SHYAM & CO. RS. 8,04,787/- TOTAL AMOUNT OF ENTRIES = RS.14,28,895/ - ALSO THE DETAILS OF INCOME TAX RETURN FILED BY M/S RADHEY SHYAM & CO FOR A.Y. 2007-08 PROCESSING DONE U/S 143(1) OF I. TAX ACT THEREOF WERE TRIED TO BE T AKEN OUT 21 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. FROM ITD SYSTEM. HOWEVER, THE SAME WERE NOT FOUND AVAILABLE THERE. THUS, AS PER OUR RECORD, THE ASSES SEE HAS NOT FILED ANY RETURN OF INCOME FOR A.Y. 2007-08. FU RTHER, NO SCRUTINY ASSESSMENT WAS DONE IN A.Y. 2007-08. THEREFORE, I HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS.14,25,895/- FOR T HE F,Y. 2006-07 RELEVANT TO A.Y. 2007-08 HAS ESCAPED ASSESS MENT. BESIDES THIS, ANY OTHER INCOME CHARGEABLE TO TAX TH AT HAS ESCAPED ASSESSMENT, WHICH WILL COME TO THE NOTICE O F THIS OFFICE DURING ASSESSMENT PROCEEDINGS SHALL ALSO BE ADDED BACK. THUS, I HAVE REASONS TO BELIEVE THAT IT IS A FIT CASE FOR INITIATION OF PROCEEDINGS U/S. 147 OF THE ACT. PROPOSAL IN THE PRESCRIBED FORM FOR THE AY. 2007-08 (F.Y. 2006-07) IS SUBMITTED HEREWITH FOR KIND CONSIDERATI ON AND NECESSARY APPROVAL U/S 151(2) OF THE I. TAX ACT, 19 61 AS THE SAME IS GETTING BARRED BY LIMITATION ON 31/3/2013. IF APPROVED, NOTICE U/S. 148 OF THE ACT MAY BE ISSU ED. SD/- 13.3.-- (PAWAN KUMAR VASHIST) INCOME TAX OFFICER WARD-39(3), NEW DELHI. 22 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. 4.2. HE HAS ALSO RELIED UPON SEVERAL OTHER ORDERS OF THE TRIBUNAL IN THE CASE OF OTHER ASSESSEES, IN WHICH, IDENTICAL ADDITION HAVE BEEN DELETED. 5. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORD ERS OF THE AUTHORITIES BELOW. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM O F THE VIEW THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASS ESSEE BY THE ORDER OF THE TRIBUNAL IN THE CASE OF SAME ASSESSEE FOR PRECEDING A.Y. 2006-2007 (SUPRA). THE ORDER OF THE TRIBUNAL I S REPRODUCED ABOVE AS WELL AS REASONS FOR REOPENING O F THE ASSESSMENT FOR ASSESSMENT YEAR UNDER APPEAL ARE ALS O REPRODUCED ABOVE. IN THE REASONS RECORDED FOR A.Y. 2006-2007 THE SAME LETTER RECEIVED BY THE A.O. FROM THE INCOM E TAX DEPARTMENT ARE REFERRED WHICH ARE SAME AS HAVE BEEN REFERRED IN THE REASONS FOR A.Y. 2007-2008. THE PERSONS ARE SAME THROUGH WHOM THE ACCOMMODATION ENTRIES OF BOGUS PUR CHASES HAVE BEEN PROVIDED IN A.Y. 2006-2007 AS WELL AS IN A.Y. 2007- 2008 IN APPEAL. THEREFORE, FACTS ARE SAME AND IDENT ICAL. 23 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. THEREFORE, THE LD. CIT(A) IS BOUND TO FOLLOW THE OR DER OF THE TRIBUNAL FOR PRECEDING A.Y. 2006-2007 TO QUASH REOP ENING OF THE ASSESSMENT AS WELL AS TO DELETE THE ADDITION ON MERIT. BOTH THE ISSUES ARE, THEREFORE, COVERED BY THE ORDER OF THE ITAT, DELHI BENCH IN ASSESSEES OWN CASE FOR A.Y. 2006-2007 (SU PRA). FOLLOWING THE SAME, I SET ASIDE THE ORDERS OF THE A UTHORITIES BELOW AND QUASH THE REOPENING OF THE ASSESSMENT UND ER SECTION 148 OF THE I.T. ACT AS WELL AS DELETE THE ADDITION ON MERIT. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DT. 09 TH JULY, 2018. VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. 24 ITA.NO.7387/DEL./2017 SHRI RADHEY SHYAM, NEW DELHI. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.