2019 (2) TMI 1954

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..... The grounds of appeal filed by the assessee read as under: 1. The CIT(A) erred in upholding the action of the Income-tax Officer-19(1)(3), Mumbai (hereinafter referred to as the Assessing Officer) in issuing notice under section 148 of the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the issue of notice under section 148 is without jurisdiction, bad in Jaw and hence, needs to be quashed. 2. The CIT(A) erred in upholding the action of the Assessing Officer in confirming the addition to the tune of Rs. 2,81,572, being 3% of purchases aggregating Rs. 93,85,734 debited to the profit and loss account on the ground that the said purchaser are bogus. The appellants contend that on the....

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....rnished various details in response to the questionnaire sent by the AO. Also the assessee filed another reply vide letter dated 28.12.2015, in response to the show-cause notice issued by the AO. However, the AO was not convinced with the said explanation for the reason that during the course of search action, it revealed that the said Jain Group was exclusively engaged in the business of issuing non-genuine purchase bills and also unsecured loan accommodation entries to various interested parties and the assessee had taken accommodation entries to the tune of Rs. 93,85,734/- from the above group. Therefore, the AO treated the profit embedded in such purchases as the income of the assessee and estimated it @ 8% of Rs. 93,85,734/-. According....

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....d around 1%, I am of the considered opinion that if the addition is sustained to the extent of 3% of the purchases made, as the profit element embedded in such purchases from the four parties belonging to Shri Rajendra Jain Group concerns, that will meet the ends of justice. In view of the same, I direct the AO to restrict the addition @ 3% of Rs. 93,85,734/- i.e. the purchases made from M/s Aadi, M/s Maulimani, M/s Avi and M/s Sparsh. This ground of appeal is therefore partly allowed." 5. Before us, the Ld. counsel of the assessee submits that the assessee had submitted corroborative evidence before the AO in the form of (i) purchase invoices from these parties, (ii) confirmation statement/ledger account of the assessee in the books of ....

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....real importer of diamonds. Further it is mentioned by the Ld. DR that the CIT(A) has only restricted the profit element to 3% of such purchases of Rs. 93,85,734/- and the same may be confirmed. 7. We have heard the rival submissions and perused the relevant materials on record. As mentioned earlier the AO reopened the assessment which was processed u/s 143(1) of the Act. In the case of Rajesh Jhaveri Stock Brokers P. Ltd. (supra), the Hon'ble Supreme Court held that intimation u/s 143(1)(a) is not an assessment and held valid the notice issued u/s 148. In the case of Kone Elevator India P. Ltd. v. ITO 340 ITR 454 (Mad), CIT v. Ideal Garden Complex P. Ltd. 340 ITR 609 (Mad), it is held that in the case of return of income processed u/s 14....