M/S G.B. IMPEX , Jaipur V. INCOME TAX OFFICER, WARD-5-3, Jaipur

ITA 800/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0553 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Keywords: Bogus purchase; Bogus Share capital; Search and seizure; Tangible material; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion; Borrowed satisfaction
• Section: 143(3); 147; 148; 263; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 624/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 M/S G.B. IMPEX, B-172, RAJENDRA MARG, BAPU NAGAR, JAIPUR. CUKE VS. INCOME TAX OFFICER WARD-6(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAGFG 3052 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 800/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 M/S G.B. IMPEX, B-172, RAJENDRA MARG, BAPU NAGAR, JAIPUR. CUKE VS. INCOME TAX OFFICER WARD-5(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAGFG 3052 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04/09/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 18/09/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST THE TWO SEPARATE ORDERS DATED 23/02/2018 AND 27/03/2018 OF LD. CIT(A)-2, JAIPUR ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 2 FOR THE A.Y. 2009-10 AND 2010-11 RESPECTIVELY. FOR THE ASSESSMENT YEAR 2009-10, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS O F APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE NOTICE ISSUE U/S 148 AND CONSEQUENT ORDER PASSED U/S 147 IS ILLEGAL AND BAD IN LAW. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE TRADING ADDITION OF RS. 62,44,358/- BY APPLYING G.P. RATE O F 9% AS AGAINST G.P. RATE OF 5.68% DECLARED BY THE ASSESSEE. SHE HA S FURTHER ERRED IN OVERLOOKING THE FACT THAT THE A.O. IN THE ORIGINAL ASSESSMENT AFTER INVOKING PROVISIONS OF SECTION 145(3) MADE A TRADIN G ADDITION OF RS. 2,50,000/- ON THE BASIS OF THE SAME BOOKS OF ACCOUN T, APPLICATION OF G.P. RATE OF 9% AND THEREBY, CONFIRMING TRADING ADD ITION OF RS. 62,44,358/- IS WHIMSICAL, ARBITRARY AND ON SURMISES AND CONJECTURES. 3. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 4. NECESSARY COST BE AWARDED TO THE ASSESSEE. 2. GROUND NO.1 OF THE APPEAL IS REGARDING VALIDITY OF INITIATION OF PROCEEDINGS U/S 147/148 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND CONSEQUENTIAL REASSESSMENT ORDER PASSED U/S 147 OF THE ACT. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE FILED ITS RETURN OF INCOME OF 30 TH SEPTEMBER, 2009 DECLARING TOTAL INCOME OF RS. 54,3 50/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 1 43(3) OF THE ACT ON 22/12/2011 WHEREBY THE BOOKS OF ASSESSEE WERE REJECTE D U/S 145(3) OF THE ACT AND A TRADING ADDITION OF RS. 2,50,000/- WAS MADE BY THE ASSESSING OFFICER. THE LD AR HAS POINTED OUT THAT TH E ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT FRAMED U/S 143(3) OF THE AC T HAS VERIFIED ALL THE ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 3 PURCHASES MADE BY THE ASSESSEE AND MADE A TRADING A DDITION AFTER REJECTION OF BOOKS OF ACCOUNT ON SPECIFIC GROUNDS T HAT CERTAIN PURCHASES WERE FOUND UNVERIFIABLE APART FROM NON-MAINTENANCE O F STOCK REGISTER. THUS, THE LD AR HAS SUBMITTED THAT THE ISSUE OF PURC HASE WAS CONSIDERED AND EXAMINED BY THE ASSESSING OFFICER WHILE PASSING THE ORIGINAL ASSESSMENT THEN THE SUBSEQUENT REOPENING OF THE ASS ESSMENT ON THE SAME ISSUE AND THAT TOO AFTER EXPIRY OF FOUR YEARS IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE QUASHED. THE CASE WAS FALLS IN THE P ROVISO TO SECTION 147 WHEREIN THE ASSESSMENT CANNOT BE REOPENED AFTER EXPI RY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE RE ASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR ASSESSMENT. ONCE THE ASSESSING OFFICER EXAMINED THE ISSUE INCLUDING THE PURCHASES MADE BY THE ASSESSEE AND MADE A TRADI NG ADDITION WHILE PASSING THE ORIGINAL ASSESSMENT U/S 143(3) OF THE A CT THEN IN ABSENCE OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THE REOPENING ON THE GROUND OF BOGU S PURCHASES IS NOT PERMITTED. THE LD AR HAS REFERRED TO THE REASONS REC ORDED BY THE ASSESSING OFFICER AND SUBMITTED THAT EVEN THE ASSES SING OFFICER WAS NOT SURE ABOUT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT WHETHER ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY OR BOGU S UNSECURED LOAN OR ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 4 BOGUS SALE AND PURCHASES. THUS, IT IS APPARENT FROM THE REASONS THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND WHILE FOR MING THE BELIEVE THAT IT IS A BORROWED SATISFACTION BASED ON THE REPORT OF TH E DIT (INVESTIGATION) FOR REOPENING OF THE ASSESSMENT, WHICH IS NOT PERMIS SIBLE UNDER THE LAW. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON TH E FOLLOWING DECISIONS. (I) M/S DWARKA GEMS LTD. VS DCIT ITA NO. 71/JP/2017 ORDER DATED 27/03/2018 (JAIPUR)(TRIB). (II) NIRMALA AGARWAL VS ACIT ITA NO. 995 & 996/JP/2 016 ORDER DATED 11/04/2018 (2018) 58 TAXWORLD 280 (JAIPUR)(TRIB). (III) M/S KARWASRA DEVELOPERS PVT. LTD. ITA NO. 393 /JP/2016 ORDER DATED 11/06/2018 (JAIPUR)(TRIB). (IV) DYNACRAFT AIR CONTROLS VS. SNEHA JOSHI & ORS. (2013) 355 ITR 102 (BOM)(HC). (V) CIT VS. ECO MEDIA (P) LTD. (2012) 81 CCH 85 (MAD .)(HC) THE LD AR HAS SUBMITTED THAT THE COORDINATE BENCHES OF THIS TRIBUNAL IN THE CASES CITED (SUPRA) HAVE CONSIDERED AN IDENTICA L ISSUE AND FOUND THAT THE REOPENING WAS NOT VALID WHEN THE ORIGINAL ASSESSM ENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSMENT WAS REOPENE D AFTER EXPIRY OF FOUR YEARS. 3. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ASSESSMENT WAS REOPENED WHICH IS BASED ON NEW FACTS AND INFORMAT ION CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER ON THE BASIS OF T HE REPORT OF DIT(INV.) AS WELL AS STATEMENT RECORDED BY THE INVESTIGATION W ING OF ONE SHRI VIJAY ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 5 NARENDRA KOTHARI WHO HAS ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES IN RESPECT OF SHARE APPLICATION MONEY, PURC HASES AND LOAN. THE ASSESSEE HAS CLAIMED PURCHASES FROM M/S KOTHARI IMP EX WHICH WAS FOUND INDULGED IN PROVIDING ACCOMMODATION ENTRIES, THEREF ORE, THE REOPENING IS BASED ON TANGIBLE MATERIAL IN THE SHAPE OF REPORT O F INVESTIGATION WING AS WELL AS STATEMENT OF SHRI VIJAY NARENDRA KOTHARI REC ORDED ON 10/10/2013. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ORI GINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 22/12/2011 WHERE BY THE ASSESSING OFFICER MADE A TRADING ADDITION OF RS. 2,50,000/- A FTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S 145(3) OF THE ACT. T HE REASONS FOR REJECTION OF BOOKS OF ACCOUNT BY THE ASSESSING OFFICER IN THE ORIGINAL SCRUTINY ASSESSMENT WAS NON-MAINTENANCE OF STOCK REGISTER, UN VERIFIABLE PURCHASES AND VALUATION OF STOCK. THUS, THE ASSESSING OFFICER AFTER CONDUCTING ENQUIRY IN RESPECT OF PURCHASES MADE BY THE ASSESSE E FOUND THAT SOME OF THE PURCHASES WERE NOT VERIFIABLE. HOWEVER, THE ASSES SING OFFICER HAS NOT COMMENTED ON THE GENUINENESS OF THE PURCHASES MADE FROM M/S KOTHARI IMPEX. SUBSEQUENTLY, THE ASSESSING OFFICER VIDE NOT ICE ISSUED U/S 148 ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 6 DATED 12/03/2016 HAS REOPENED THE ASSESSMENT WHILE R ECORDING THE REASONS AS UNDER: ON THE BASIS OF INFORMATION AVAILABLE ON RECORD IT IS GATHERED THAT DURING THE YEAR ASSESSEE HAS TAKEN ACCOMMODATION ENTRY IN THE NATUR E OF BOGUS SHARE APPLICATION MONEY/ BOGUS UNSECURED LOAN/ BOGUS SALE AND PURCHAS E. THE ASSESSEE HAS OBTAINED FOLLOWING ACCOMMODATION ENTRIES:- S. NO. NAME OF CONCERN/ TRANSACTION GROUP BEN EFICIARY ENTRY PROVIDER AMOUNT NAME 1. KOTHARI IMPEX RS.2,79,35,857/- GAUTAM JAIN G ROUP, SURAT G.B.IMPEX TOTAL RS. 2,79,35,857/- THE ABOVE CONCERN IS INDULGED IN PROVIDING ACCOMMOD ATION ENTRIES IN LIEU OF CASH OBTAINED FROM THE BENEFICIARY AND NOT DOING ANY GEN UINE BUSINESS ACTIVITIES AS DIVULGED DURING THE COURSE OF SEARCH AND SEIZURE PR OCEEDING IN DHARMICHAND JAIN GROUP, SURAT. THE ASSESSEE HAS FAILED TO DISCLOSE F ULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THEREFORE, I HAVE THE REASON TO BELIEVE THAT, THE INCOME OF RS.2,79,35,857/- WHICH IS CHARGEABLE TO T AX, HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT 196 1 IT IS MANIFEST FROM THE REASONS RECORDED BY THE ASS ESSING OFFICER PROPOSED TO REOPEN THE ASSESSMENT ON ACCOUNT OF INCOME AS ES CAPED ASSESSMENT OF RS. 2,79,35,837/-, HOWEVER, THE ASSESSING OFFICER HA S NOT SPECIFIED THE NATURE OF TRANSACTION IN THE REASONS RECORDED BUT H AS STATED THAT ON THE BASIS OF THE INFORMATION IT IS GATHERED THAT DURING THE YEAR THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES IN THE NAT URE OF BOGUS SHARE APPLICATION MONEY/BOGUS UNSECURED LOAN/ BOGUS SALE AND PURCHASES. THIS STATEMENT OF THE ASSESSING OFFICER IN THE REASONS RECORDED CLEARLY SHOWS THAT T HE ASSESSING OFFICER WAS NOT SURE ABOUT THE EXACT NATURE OF TRANSACTION A S ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 7 ACCOMMODATION ENTRY AVAILED BY THE ASSESSEE FROM M/ S KOTHARI IMPEX. WHEREAS AS PER THE RECORD, THE ASSESSEE HAS MADE PU RCHASES OF THE SAID AMOUNT FROM M/S KOTHARI IMPEX AND NO OTHER TRANSACT ION IS EITHER RECORDED IN THE BOOKS OR IS FOUND AS PER SEARCH AND SEIZURE PROCEEDINGS. IT CLEARLY REVEALS THAT THE REASONS RECORDED BY THE AS SESSING OFFICER ARE VERY VAGUE IN NATURE WITHOUT SPECIFYING THE TRANSACTION WH ETHER IT IS SHARE APPLICATION MONEY OR UNSECURED LOAN OR SALE OR PURC HASES. IT IS NOT THE CASE OF TRANSACTION FIRST TIME CAME INTO LIGHT ONLY AFTER THE REPORT OF THE INVESTIGATION WING, WAS RECEIVED BY THE ASSESSING OF FICER BUT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND T HE ASSESSING OFFICER HAS CONDUCTED AN ENQUIRY AND TAKEN A DECISION THAT SOME OF THE PURCHASES MADE BY THE ASSESSEE WERE UNVERIFIABLE AND ACCORDING LY A TRADING ADDITION OF RS. 2,50,000/- WAS MADE AFTER REJECTION OF BOOKS OF ACCOUNT. HENCE, THE TRANSACTION OF PURCHASES MADE FROM M/S KOTHARI IMPE X WAS DULY DISCLOSED IN THE RETURN OF INCOME AND WAS ALSO EXAMINED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE AC T. HENCE, THE REOPENING BASED ON THE INFORMATION OF INVESTIGATION WING IS ONLY TO CONDUCT A FURTHER ENQUIRY TO ASCERTAIN THE CORRECT NATURE OF TRANSACTION OR WHETHER A TRANSACTION WAS IN THE NATURE OF BOGUS SHAR E APPLICATION MONEY OR BOGUS UNSECURED LOAN OR BOGUS SALES AND PURCHASE S. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER CANNOT RESORT TO THE PRO VISIONS OF SECTION ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 8 147/148 OF THE ACT ONLY TO CONDUCT A ROVING AND FIS HING THE ENQUIRY AND THEN TO DECIDE WHETHER ANY INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT OR NOT. IN THIS CASE, THE ASSESSING OFFI CER HAS FINALLY CONCLUDED THAT THE TRANSACTION OF PURCHASES MADE BY THE ASSES SEE ARE IN THE CATEGORY OF UNVERIFIABLE PURCHASES INSTEAD OF HOLDI NG THE BOGUS TRANSACTION AND FINALLY MADE AN ADDITION OF 25% OF SUCH PURCHAS ES. THEREFORE, THE ASSESSING OFFICER HAS ESTIMATED THE INCOME OF THE A SSESSEE IN THE REASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTI ON 147 OF THE ACT WHICH WAS FURTHER ESTIMATED BY THE LD. CIT(A) BY APPLY ING G.P. RATE OF 9%. IT IS PERTINENT TO NOTE THAT THE ORIGINAL ASSESSMEN T WAS COMPLETED ON THE INCOME WHICH IS ALSO ESTIMATED BY THE ASSESSING OFFI CER AFTER REJECTION OF BOOKS OF ACCOUNT AND A TRADING ADDITION OF RS. 2,50 ,000/- WAS MADE, THEREFORE, REASSESSMENT WAS DONE BY THE ASSESSING OF FICER ONLY TO RE- ESTIMATE THE INCOME OF THE ASSESSEE. THERE IS NO DIS PUTE THAT THE NOTICE ISSUED U/S 148 OF THE ACT ON 12/3/2016 IS AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR UNDER CONSIDERA TION, HENCE, THE REOPENING HAS TO BE TESTED WITH THE COMPLIANCE OF TH E CONDITIONS SET OUT IN THE PROVISO TO SECTION 147 OF THE ACT. WE NOTE THAT THE COORDINATE BENCHES OF THIS TRIBUNAL HAVE CONSIDERED AN IDENTICA L ISSUE IN THE CASES RELIED UPON BY THE ASSESSEE (SUPRA) AND IN THE CASE OF M/S DWARKA GEMS LTD. VS DCIT (SUPRA), THE TRIBUNAL HAS ANALYSED THE P ROVISIONS OF SECTION ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 9 147 OF THE ACT AS WELL THE FACTS WHICH ARE IDENTICAL TO THE FACTS IN THE CASE IN HAD AND HAS HELD IN PARA 4 AS UNDER: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ORIGINAL A SSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 27 TH DECEMBER, 2010 AFTER AN ADDITION ON ACCOUNT OF UNVERIFIABLE/BOGUS PURCHASES WAS MADE BY THE AO. THUS IT IS MANIFEST FROM THE RECORD THAT THE AO WHILE COMPL ETING THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) HAS CONDUCTED AN EN QUIRY IN RESPECT OF THE PURCHASES MADE BY THE ASSESSEE AND FINALLY CONC LUDED THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE 12 PARTIES WERE NOT VERIFIABLE AND ACCORDINGLY AN ADDITION OF 25% OF SUCH PURCHASE S WERE MADE BY THE AO. THEREFORE, THE ISSUE OF GENUINENESS OF PURCHAS ES WAS DULY EXAMINED BY THE AO WHILE COMPLETING THE SCRUTINY ASSESSMENT UNDER SECTION 143(3). THE AO, THEREAFTER, ISSUED A NOTICE UNDER SECTION 1 48 ON 21.11.2014 WHICH IS AFTER FOUR YEARS FROM THE END OF THE ASSES SMENT YEAR UNDER CONSIDERATION. THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT ARE AS UNDER :- AS PER INFORMATION IT HAD BEEN ESTABLISHED THAT BO GUS SALES ENTRIES WERE MADE IN FAVOUR OF M/S DWARKA GEMS ON VARIOUS D ATED DURING F.Y. 2007-08 I.E. A.Y. 2008-09 TOTAL AMOUNTING TO RS. 31 ,40,818/-. THESE ENTRIES WERE PROVIDED BY M/S MERIDIAN GEMS & M/S MI LLENIUM STARS WHICH ARE SOME OF THE BOGUS CONCERNS OF BHANWAR LAL JAIN & GROUP. THUS IT IS CLEAR THAT THE REOPENING OF THE ASSESSME NT IS BASED ON THE INFORMATION RECEIVED AND TO ASSESS THE INCOME IN RE SPECT OF THE PURCHASES MADE BY THE ASSESSEE WHICH WAS EXAMINED BY THE AO D URING THE ORIGINAL SCRUTINY ASSESSMENT UNDER SECTION 143(3). THE AO A FTER AN ENQUIRY AND INVESTIGATION DURING THE ORIGINAL ASSESSMENT PROCEE DINGS HELD THAT THE PURCHASES MADE FROM 12 PARTIES ARE NOT VERIFIABLE/G ENUINE. THUS EXCEPT THE PURCHASES MADE FROM THOSE 12 PARTIES, THE AO HA S ACCEPTED THE GENUINENESS OF THE PURCHASES INCLUDING THE TWO PART IES, NAMELY M/S. ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 10 MARIDIAN GEMS AND M/S. MILLENNIUM STAR. EVEN IF TH E SUBSEQUENT INFORMATION RECEIVED FROM THE DIT INVESTIGATION WIN G MUMBAI RENDERS THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DE FECTIVE AND ERRONEOUS FOR WANT OF PROPER VERIFICATION AND INVES TIGATION, THE SAME WOULD NOT TURN THE CASE IN THE CATEGORY THAT THE AS SESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL THE PARTICULARS NECESS ARY FOR ASSESSMENT. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS NOT FU RNISHED THE REQUISITE DOCUMENTS AND DETAILS OF PURCHASE RATHER THE AO CON DUCTED A DETAILED ENQUIRY DURING THE ORIGINAL ASSESSMENT ON THE ISSUE OF GENUINENESS OF PURCHASES. THUS THE INFORMATION RECEIVED BY THE AO FROM INVESTIGATION WING MUMBAI WOULD NOT AMOUNT TO NON DISCLOSURE OF P ARTICULARS BY THE ASSESSEE, RATHER IT WAS THE SUBJECT MATTER OF ENQUI RY BY THE AO IN THE ORIGINAL ASSESSMENT. THEREFORE, IF THE AO FAILED TO CONDUCT PROPER ENQUIRY REGARDING THE GENUINENESS OF THE PURCHASES, THE SAM E WOULD NOT GIVE JURISDICTION TO THE AO TO REVIEW THE ORDER OR REMOV E THE DEFECT BASED ON SUBSEQUENT INFORMATION. THE STATUTE HAS PROVIDED S EGREGATION OF POWERS AND JURISDICTION BETWEEN THE HIERARCHY OF THE TAXIN G AUTHORITIES AND, THEREFORE, THE POWER AND JURISDICTION VESTED WITH O NE AUTHORITY CANNOT BE ASSUMED BY THE OTHER AUTHORITY. SECTION 263 IS A P ROVISION OF CHECK AND BALANCES AND, THEREFORE, IN CASE OF FAILURE ON THE PART OF THE AO TO CONDUCT A PROPER ENQUIRY AS REVEALED BY A SUBSEQUEN T MATERIAL AND INFORMATION CAME TO THE KNOWLEDGE OF THE COMMISSION ER, THE PROVISIONS OF SECTION 263 CAN BE INVOKED BY THE REVISIONARY AU THORITY. THEREFORE, THE REMEDY FOR ANY DEFECT OR DEFAULT IN THE ORDER OF TH E AO IS PROVIDED UNDER SECTION 263 OF THE ACT AND NOT UNDER SECTION 147. THE REOPENING AFTER FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR COMP LETED UNDER SECTION 143(3) IS NOT PERMISSIBLE WITHOUT SATISFYING THE CO NDITION PRECEDENT AS PROVIDED UNDER THE PROVISIONS OF SECTION 147 OF THE ACT. THE SUBSEQUENT INFORMATION RECEIVED BY THE AO CANNOT REMOVE OR REL AX THE SAID CONDITION PROVIDED UNDER THE PROVISIONS OF SECTION 147 THAT T HE ASSESSEE FAILED TO ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 11 DISCLOSE FULLY AND TRULY ALL THE MATERIAL NECESSARY FOR ASSESSMENT. IN THE CASE IN HAND, WHEN THE AO HAS ALREADY CONDUCTED AN ENQUIRY ON THE ISSUE AND THE ASSESSEE IS NOT EXPECTED TO FURNISH MORE TH AN WHAT WAS ALREADY FURNISHED DURING THE ASSESSMENT PROCEEDINGS, THEN T HE REOPENING BASED ON THE INFORMATION FROM THE INVESTIGATION WING ON T HE SAME ISSUE IS NOTHING BUT CHANGE OF OPINION AND TO REVIEW THE ORD ER PASSED BY THE AO UNDER SECTION 143(3) WHICH IS NOT PERMISSIBLE UNDER LAW. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD TH AT THE REOPENING IS NOT VALID AND, THEREFORE, THE REASSESSMENT FRAMED BY TH E AO IS WITHOUT JURISDICTION AND CONSEQUENTLY THE REASSESSMENT ORDE R PASSED IS QUASHED. THUS, THE REOPENING IN THE SAID CASE WAS ALSO BASED O N THE REPORT OF THE INVESTIGATION WING, MUMBAI AND THE ASSESSING OFFICE R PROPOSED TO REOPEN THE ASSESSMENT TO ASSESS THE INCOME ON ACCOUNT OF A CCOMMODATION ENTRIES RECEIVED BY THE ASSESSEE. HOWEVER, THE TRIBUN AL FOUND THAT WHEN THE ASSESSEE DISCLOSED ALL THE RELEVANT FACTS AND P RODUCED ALL THE MATERIAL, WHICH WAS REQUIRED TO BE PRODUCED THEN EVEN IF THE AS SESSING OFFICER FAILED TO CONDUCT A PROPER ENQUIRY REGARDING GENUIN ENESS OF THE PURCHASES WHILE PASSING THE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT, THE SAME WOULD NOT GIVE THE JURISDICTION TO THE ASSESSING OFF ICER TO REVIEW THE ORDER OR REMOVE THE DEFECT BASED ON THE SUBSEQUENT INFORM ATION. IN THE CASE IN HAND, THE ASSESSING OFFICER HAS DULY EXAMINED THE P URCHASES MADE BY THE ASSESSEE AND ALSO OBSERVED THAT SOME OF THE PURCHAS ES ARE NOT VERIFIABLE AND ACCORDINGLY MADE THE ADDITION BEING TRADING ADD ITION OF RS. 2,50,000/- ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 12 WHILE PASSING THE ORDER U/S 143(3) OF THE ACT AND TH EREFORE, THE REOPENING AFTER FOUR YEARS IS NOT PERMITTED JUST TO REVIEW THE EARLIER ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT BASED O N THE INFORMATION RECEIVED FROM THE INVESTIGATION WING ON THE SAME IS SUE, WHICH WAS SUBJECT MATTER OF ENQUIRY AND INVESTIGATION BY THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S 143(3) OF THE ACT. EVEN OTHER WISE THE REASONS RECORDED BY THE ASSESSING OFFICER ARE VERY VAGUE WHI CH SUGGESTS THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND AND JUST RECORDED THE REASONS AS BORROWED FROM THE REPORT OF THE INVESTIGATION WIN G WITHOUT SPECIFYING THE NATURE OF TRANSACTION WHEREAS THE ASSESSEE HAD O NLY ONE TRANSACTION OF PURCHASE FROM THE SAID PARTY NAMELY M/S KOTHARI IMPEX. HENCE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL A S THE DECISION OF THE COORDINATE BENCH (SUPRA) WE HOLD THAT THE REOPENING IS NOT VALID AND THE SAME IS LIABLE TO BE QUASHED. ACCORDINGLY, THE ASSE SSING OFFICER HAS FRAMED REASSESSMENT WITHOUT JURISDICTION AND THEREFO RE, THE REASSESSMENT ORDER IS NOT VALID AND THE SAME IS SET ASIDE. 5. SINCE WE HAVE QUASHED THE REOPENING AND REASSESSM ENT MADE BY THE ASSESSING OFFICER, THEREFORE, WE DO NOT PROPOSE TO GO INTO THE GROUND NO. 2 OF THE APPEAL ON THE MERITS OF THE ADDITION, WHICH BECOMES INFRUCTUOUS. ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 13 6. IN THE CASE FOR A.Y. 2010-11, THE ASSESSEE HAS R AISED FOLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE, T HE NOTICE ISSUED U/S 148 AND CONSEQUENT ORDER PASSED U/S 147 IS ILLEGAL AND BAD IN LAW. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF AO IN TREATING THE PURCHASES OF RS. 1,71,03,970/ - MADE FROM KOTHARI IMPEX AS BOGUS BY NOT CONSIDERING THE VARIO US EVIDENCES FILED BY THE ASSESSEE. 2.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN MAKING ADDITION OF RS.70,45,465/- (1,74,32,920- 1,03,87,455) BY APPLYI NG G.P. RATE OF 9% ON TURNOVER OF RS.19,36,99,119/- AS AGAINST ADDI TION OF RS.42,75,990/- MADE BY AO BY DISALLOWING 25% OF THE PURCHASES OF RS.1,71,03,970/- MADE FROM KOTHARI IMPEX, THEREBY E NHANCING THE ADDITION BY RS.27,69,475/-. SHE HAS FURTHER ERRED I N MAKING THE ADDITION BY APPLYING G.P. RATE OF 9% OF THE TURNOVE R. SHE HAS FURTHER ERRED IN MAKING THE ADDITION BY APPLICATION OF G.P. RATE IGNORING THAT HONBLE ITAT IN ITA NO.429/JP/15 DATED 13.05.2016 I N THE ASSESSEES OWN CASE FOR THE SAME AY HAS DISAPPROVED THE APPLIC ATION OF G.P. RATE APPLIED BY THE AO AND RESTRICTED THE ADDITION AT 15% OF THE ALLEGED UNVERIFIABLE PURCHASES. 3. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 4. NECESSARY COST BE ALLOWED TO THE ASSESSEE. 7. GROUND NO.1 OF THE APPEAL IS REGARDING THE VALID ITY OF INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT AND CONSEQUENTIA L REASSESSMENT ORDER PASSED U/S 147 OF THE ACT. THE ASSESSEE FILED ITS RE TURN OF INCOME ON 12/10/2010 DECLARING TOTAL INCOME OF RS. 55,360/- O N WHICH SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WAS PASSED ON 25/3 /2013. THE ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 14 ASSESSING OFFICER WHILE PASSING THE SCRUTINY ASSESS MENT, REJECTED THE BOOKS OF ACCOUNT AND ALSO OBSERVED THAT THE PURCHAS ES MADE BY THE ASSESSEE FROM 12 PARTIES WERE NOT VERIFIABLE AND ACC ORDINGLY, THE ASSESSING OFFICER ESTIMATED THE INCOME OF THE ASSES SEE BY APPLYING G.P. RATE OF 6.06% AS AGAINST THE G.P. RATE DECLARED BY THE ASSESSEE AS 5.36%. CONSEQUENTLY, THE ASSESSING OFFICER MADE TRADING AD DITION OF RS. 13,50,711/-. THE SAID ORDER OF THE ASSESSING OFFICE R WAS SUBSEQUENTLY RECTIFIED BY THE ASSESSING OFFICER WHILE PASSING TH E ORDER U/S 154 OF THE ACT DATED 06/09/2013 WHEREIN THE ASSESSING OFFICER A PPLIED G.P. RATE @ 8.32% AND ACCORDINGLY ENHANCED THE ADDITION TO RS. 57,83,670/-. 8. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) AND VIDE ORDER DATED 06/2/2015, THE L D. CIT(A) HAD CONFIRMED THE DISALLOWANCES BY APPLYING 15% OF UNVER IFIABLE PURCHASES AND CONSEQUENTLY THE ADDITION WAS RESTRICTED TO RS. 7,84,442/-. 9. THE REVENUE FILED AN APPEAL AGAINST THE SAID ORDE R OF THE LD. CIT(A) BEFORE THIS TRIBUNAL. HOWEVER, THE TRIBUNAL VIDE ORDER DATED 13/5/2016 DISMISSED THE APPEAL FILED BY THE REVENUE IN ITA NO . 429/JP/2015 AND UPHELD THE ORDER PASSED BY THE LD. CIT(A). THEREAFTE R THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING THE NOTICE U/S 1 48 DATED 25/3/2017 BY RECORDING THE REASONS AS UNDER: ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 15 THE ASSESSEE FIRM HAS FILED ITS RETURN OF INCOME F ROM THE YEAR UNDER CONSIDERATION ON 12/10/2010 DECLARING TOTAL INCOME OF RS. 55,360/ -. FURTHER ON THE BASIS OF INFORMATION AVAILABLE ON RECORD IT IS GATHERED THAT DURING THE YEAR ASSESSEE HAS TAKEN ACCOMMODATION ENTRY IN THE NATURE OF BOGUS PU RCHASE. THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRY FROM FOLLOWING CONCERN AS UNDER:- S. NO. NAME OF CONCERN/ TRANSACTION GROUP BEN EFICIARY ENTRY PROVIDER AMOUNT NAME 1. KOTHARI IMPEX RS.1,71,03,970/- GAUTAM JAIN & ORS. G.B. IMPEX TOTAL RS.1,71,03,970/- THE ABOVE CONCERNS OF GAUTAM JAIN & OTHERS GROUP SU RAT IS INDULGED IN PROVIDING ACCOMMODATION ENTRIES IN LIEU OF CASH OBTAINED FROM THE BENEFICIARY AND NOT DOING ANY GENUINE BUSINESS ACTIVITIES AS DIVULGED DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDING IN GAUTAM JAIN & OTHERS GROUP SURAT. THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR IT S ASSESSMENT. THEREFORE, I HAVE THE REASON TO BELIEVE THAT, THE INCOME OF RS.1,71,03,97 0/- WHICH IS CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTIO N 147 OF THE IT ACT 1961 THUS, THE ASSESSING OFFICER HAS RECORDED AN IDENTICA L REASONS EXCEPT THE FACT THAT FOR THIS YEAR THE ASSESSING OFFICER HAS S PECIFIED THE TRANSACTION AS BOGUS PURCHASES MADE FROM KOTHARI IMPEX. FURTHER TH E INFORMATION RECEIVED BY THE ASSESSING OFFICER INCLUDES THE STAT EMENT OF A DIFFERENT PERSON NAMELY SHRI GAUTAM JAIN INSTEAD OF SHRI VIJA Y NARENDRA KOTHARI. THUS THE ASSESSING OFFICER WHILE RECORDING THE REASO NS FOR TWO YEARS CONSIDERED TWO DIFFERENT STATEMENTS IN RESPECT OF TR ANSACTIONS OF PURCHASES MADE FROM THE SAME PARTY. ALL OTHER FACTS ARE IDENTICAL TO THE FACTS FOR THE A.Y. 2009-10. UNDISPUTEDLY THE ORIGIN AL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE REOPENING I S AFTER EXPIRY OF FOUR ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 16 YEARS FROM THE END OF THE ASSESSMENT YEAR AND THERE FORE, THE PROVISO TO SECTION 147 OF THE ACT IS ATTRACTED TO THE CASE OF THE CASE. BOTH THE PARTIES HAVE ADVANCED THEIR ARGUMENTS IDENTICAL TO THE ARGU MENTS ADVANCED IN THE CASE FOR A.Y. 2009-10. 10. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ISSUE OF VALIDI TY OF REOPENING FOR THE A.Y. 2010-11 IS IDENTICAL TO THE ISSUE FOR THE A.Y. 2009-10. ALL OTHER RELEVANT FACTS AND CIRCUMSTANCES ARE ALSO IDENTICAL FOR BOTH THE YEARS, ACCORDINGLY OUR FINDINGS IN THE CASE OF A.Y. 2009-1 0 SHALL APPLY MUTATIS MUTANDIS IN THIS YEAR ALSO. HENCE WE HOLD THAT THE R EOPENING IS NOT VALID AND IS HEREBY QUASHED. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/09/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18 TH SEPTEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S G.B. IMPEX, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- (I) THE ITO, WARD-6(4), JAIPUR (II) THE ITO, WARD-5(3), JAIPUR. ITA 624 & 800/JP/2018_ M/S GB IMPEX VS ITO 17 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 624 & 800/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR