Reason to Believe from seized material upheld; reassessment and valuation-based job-work additions sustained as reasonable estimates.

Reopening under section 147 was justified where seized documents, a statement recorded during GST search proceedings and communications from CGST/Central Excise indicated undisclosed manufacture, and retraction lacked evidence of coercion; consequence: reassessment and notice under section 148 upheld. The assessing officer's adoption of seized valuation and application of a conservative industry-based job work rate (4%) to compute unexplained job-work receipts was treated as a reasonable estimation in absence of positive books-rejection or specific rebuttal; consequence: addition sustained. Overall effect: assessments/reassessments confirmed and appeals dismissed on these grounds.

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Issues: (i) Whether reassessment proceedings and notice under section 148 of the Income-tax Act, 1961 were validly initiated on the basis of information and materials seized by GST/Central Excise authorities; (ii) Whether addition of Rs. 39,42,558/- as job work charges by applying 4% on the seized jewellery valuation was sustainable; (iii) Whether the valuation of jewellery as determined by CGST/Central Excise authorities and adopted in assessment is rightly assessable in the hands of the assessee and whether application of a fixed assumed job work rate was permissible.

Issue (i): Whether reassessment u/s 147 and notice u/s 148 of the Income-tax Act, 1961 are validly initiated on the material received from CGST/Central Excise authorities and statements recorded during their proceedings.

Analysis: The reopening was based on seized printouts and a statement recorded during GST search proceedings together with information received from Regional Economic Intelligence Council and communication from Joint Commissioner, GST and Excise. The factual record shows that seized material and the statement indicated manufacture of additional jewellery not reflected in books. Retraction of a statement was not supported by evidence of coercion or threat. Precedent permits reopening where prima facie material forming a reason to believe is available to the assessing authority; adequacy or sufficiency of such material is for the assessing stage and not for striking down the reason to believe.

Conclusion: Reassessment under section 147 and notice under section 148 are valid; issue decided against the assessee.

Issue (ii): Whether the addition of Rs. 39,42,558/- computed as 4% of the jewellery valuation as unexplained job work charges is sustainable.

Analysis: The Assessing Officer applied a market-average approach, noting industry making charges between 4% and 12% and adopting the lower 4% rate on account of diamond content. The assessee's contention that job work charges are based on gold weight and recorded in books was not supported by rejection of books under section 145 or by positive evidence showing all receipts were accounted for. The authorities' choice of a conservative lower-end percentage falls within a reasonable exercise of estimation in presence of seized valuation.

Conclusion: Addition of Rs. 39,42,558/- computed at 4% is upheld; issue decided against the assessee.

Issue (iii): Whether valuation of jewellery determined by CGST/Central Excise authorities and adopted by income-tax authorities is correctly attributed to the assessee and whether applying a uniform job work rate on that valuation was appropriate.

Analysis: The valuation figures were produced by CGST/Central Excise authorities based on seizure and were communicated to the assessing authority. The assessee did not produce specific discrepancies in those valuations nor identify third-party ownership of the seized jewellery. No person claimed ownership. Given verified valuation by revenue authorities and lack of counter-evidence, adoption of that valuation for assessment purposes and application of a conservative job work percentage were reasonable.

Conclusion: Valuation adopted from GST/Central Excise authorities stands and application of a fixed conservative job work rate is upheld; issue decided against the assessee.

Final Conclusion: The appeals are dismissed and the assessments/reassessments for the relevant assessment years stand confirmed, resulting in the appeals being decided in favour of the revenue on the contested issues.

Ratio Decidendi: Where assessing authorities receive seized material and corroborative communications from GST/Central Excise authorities indicating undisclosed manufacture or possession, such material can furnish a reason to believe for reopening under section 147; in absence of specific rebuttal of seized valuation or evidence of coercion in statements, a conservative industry-based percentage applied to adopted valuation for computing additions is a permissible estimate.

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