TaxTMI 
TaxTMI 
2019 (7) TMI 927
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....s taken by the assessee in the A.Y. 2012-13 reads as under: "1. That the ld. CIT(A) has erred in law and on facts in estimating GP of the appellant @ 8.5% resulting into an addition of Rs. 4,04,772/- as against an addition of Rs. 9,83,125/- made by the ld. A.O. on account of alleged unverifiable purchases of diamonds even after the facts that the appellant had declared sufficient GP and was comparable to average historical GP rate declared. Relief may please be allowed by deleting the addition so sustained by the ld. CIT(A)." 2.1 Following additional ground was raised by the assessee: "1. On the facts and circumstances of the case and in law the ld. CIT(A) erred in not holding the assumption of jurisdiction by the ld. A.O. as bad in....
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....ntending that the reopening itself was not valid in so far as merely on the basis of information the A.O. has reopened the assessment and has not made any enquiry to reach to the satisfaction that there was a reason to believe that the income has escaped assessment. Our attention was also invited to the reasons recorded for reopening according to which the A.O. has reopened the assessment on the basis of information from DGIT(Inv.), Mumbai. As per the reasons so recorded by the A.O., there was no satisfaction of the A.O. with regard to any income having been escaped assessment and merely on the basis of information, he has reopened the assessment. The ld AR has further contended that the A.O. has neither supplied copy of information so rece....
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....nvited to the profit rate chart for earlier and subsequent assessment years so as to indicate that the profit rate declared by the assessee is comparative in all the years under consideration as under: Asstt. Year Turnover Gross Profit Profit Rate 2010-11 3,70,62,443 22,54,341 6.08% 2011-12 5,42,80,906 37,27,037 6.87% 2012-13 5,78,61,983 45,13,471 7.80% 2013-14 7,06,86,095 51,74,137 7.32% 2014-15 7,89,42,771 56,70,745 7.18% 2015-16 8,53,52,037 60,66,474 7.11% 2016-17 9,51,40,396 77,63,974 8.17% 2017-18 8,62,19,742 64,83,576 7.53% Average 56,55,46,073/- 4,16,53,655/- 7.36% Our attention was also invited to the profit of 8.91% shown in respect of transaction entered with t....
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.... reopening: "On the basis of the information available on record, 1 have reasons to believe that income of Rs. 39,32,500/- chargeable to lax has escaped assessment as per clause (b) of explanation 2 of section 147 of the IT Act, 1961. Therefore, it is a fit case to issue notice u/s 148 of the I.T. Act, 1961." 09. In the reasons recorded for reopening, the A.O. stated that reopening was done on the basis of information received from DGIT (Inv.), Mumbai and on the basis of such information, he found his reason to believe that the income had escaped assessment. In the reassessment order passed U/s 143(3) r.w.s. 147 of the Act, the A.O. at various instances depicted his reliance on the borrowed information received from DGIT (Inv.), Mumbai....
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....satisfaction and not on borrowed satisfaction." Ostwal Diamond Pvt. Ltd. vs. ITO, Ward 2(5) ITA No.3653/Mum/2017 & 2270/Mum/2018 (Mumbai ITAT) "13. We have considered rival contentions and carefully gone through the orders of the authorities below. Under the provisions of Section 147, reopening solely on the basis of information received from the Investigation wing and without independent application of mind is void." 10. From the record we found that during the course of reassessment proceedings, the assessee had specifically requested the A.O. for copies of statement on which the A.O. was relying and an opportunity to cross examine the relevant parties. However, the A.O. ignored the same and no opportunity was provided to the asse....
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....ustries (Supra) was passed in the year 2006. Therefore, the judgment of the Hon'ble Supreme Court is hold precedent and the assessee's right to seek an opportunity for cross examination is justified and the rejection of the same resulted into nullity of the assessment itself in view of the decision of the Hon'ble Supreme Court in the case of Andaman Timber Industries (Supra). 12. Even on merits also, the assessee had a good case in so far as the profit declared in respect of purchases from these alleged parties were more than the profit declared in respect of other parties and the average profit declared during the year under consideration. We also found that the assessee had consistently shown profit between 6 to 8% in the A.Y. 2013-14 a....