TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 1660
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....) without appreciating the fact that no valid reasons were recorded before the issuing the said notice. The notice issued under section 148 dated 27.03.2014 lacks jurisdiction and the assessment order dated 23.03.2015 is bad-in law and void-ab-initio. The CIT(A) failed to appreciate that there was no failure on the part of Appellant to disclose material particulars and facts in the return of income, thus reopening after period 4 years by AO is invalid. 2. The Ld. CIT(A) failed to appreciate that the A.O. has recorded the reasons on the basis ol borrowed satisfaction. The reasons recorded on the basis of a report sent by the investigation wing without making any further enquiry on his own by the AO amounts to a borrowed satisfaction. Thus, the satisfaction that he has a reason to believe that income has escaped assessment as recorded in the reasons recorded is a borrowed satisfaction and not of his own satisfaction. Thus, the reasons recorded are not valid reasons recorded to issue notice under section 148 of the Act. Thus, the notice issued under section 148 dated 27.03.2014 and the assessment order dated 23.03.2015 are bad-in-law and void-ab-initio. 3. The Ld. CI....
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....pheld the addition relying on the decision of the Hon'ble Supreme Court in the case of N.K. Proteins Ltd. v. DCIT (2017) 292 CTR 354 (SC). Aggrieved the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. Before us, the assessee has filed a Paper Book containing pages 1 to 110. 4. Regarding the ground Nos. 1 and 2 of the appeal challenging validity of the reassessment, the Ld. Counsel of the assessee submitted that assessee was not interested in pursuing those grounds and accordingly same are dismissed as not pressed by the assessee. 5. The ground Nos. 3 to 6 of the appeal relates to addition of Rs.1,57,77,971/- made by the Assessing Officer as unexplained expenditure u/s 69C of the Act. It was submitted by the assessee before the Ld. CIT(A) that assessee was in the business of cut and polished diamond for last many years. It purchased rough diamond and processed it into cut and polished diamond in relevant previous year. The assessee's total sales turnover was of Rs.1,66,42,088/- which was wholly export turnover. It was submitted that the assessee made purchase of Rs.1,57,77,971/- from two parties, which consist of Rs.1,40,45,449/- from M....
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....re found in his premises were only paper companies. It was during the course of the search that Shri Rajendra Jain in his statement admitted that M/s Moulimani Impex Pt Ltd and M/s. Sun Diam, with whom the appellant had traded were such companies which were controlled and operated by him. Further, it is seen from the facts of the case that the Assessing Officer and the DDIT had not reached the conclusion that the affairs of the appellant company was providing of accommodation entries, only on the basis of the statement given by Shri Rajendra Jain but it was also on the fact that Shri Rajendra Jain had failed to prove the genuineness of his business before the DDIT and the materials/details submitted by the appellant during the course of the assessment proceeding were not sufficient to prove the creditworthiness of M/s Moulimani Impex Pt Ltd and M/S. Sun Diam, or the genuineness of the transaction. Once, it was proved beyond doubt that M/s Moulimani Impex Pvt Ltd and M/s. Sun Diam, were paper companies controlled and operated by Shri Rajendra Jain who was in the business of providing accommodation entries then the ledger and the confirmation received from ....
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....not acceptable. As stated above the DDIT and the AO had reached to the conclusion that the transactions entered by the appellant with M/s Moulimani Impex Pt Ltd and M/s. Sun Diam, controlled and operated by Shri Rajendra Jain were bogus, not only on the statement of Shri Rajendra Jain and the persons whose statements were recorded by the DDIT, but it was also on the basis/findings during the search/post search and the assessment proceedings by the A wherein he came to the conclusion that the transactions entered by the appellant M/s Moulimani Impex Pvt Ltd and M/s. Sun Diam, were controlled and operated by Shri Rajendra Jain were bogus. The appellant has failed to furnish/explain/prove the creditworthiness of the M/s Moulimani Impex Pvt Ltd and M/s. Sun Diam, with whom he had transacted. This further, proves that the finding of the search/post search proceedings and the observation of the Assessing Officer during the assessment proceedings had direct connection with the statement given by Shri Rajendra Jain that no real business was conducted in any of the firms/companies /entities which were operated from his premises In this regard, it would be pertinen....
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....ight in making addition towards 100% of bogus purchases from the M/s Moulimani Impex Pvt Ltd and M/s. Sun Diam, which were controlled and operated by Shri Rajendra Jain. The entire addition made by the Assessing Officer is upheld. Hence, the ground of appeal is dismissed." 5.1 Before us, the Ld. Counsel of the assessee submitted that identical issue of bogus purchases from 'Rajendra Jain Group' was raised in assessment year 2008-09 by the Assessing Officer and made addition of Rs.13,00,556/-. On further appeal, the Tribunal in ITA No. 1617/Mum/2023 for assessment year 2008-09 upheld the addition of 4% of the bogus purchases. He accordingly submitted that disallowance in the year under consideration should also be restricted to 4% of the bogus purchases. 5.2 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that in the year under consideration, the Assessing Officer has disallowed the entire purchases amounting to Rs.157,77,791/- from M/s Moulimani Impex Pvt. Ltd. and M/s Sun Diam, the concern which were controlled by Shri Rajendra Jain Group. The contention of the assessee before us, that disallowance in....
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....nt an appropriate opportunity to make submissions and attend the hearing. Thus, order dated 05.04.2023 has been passed in breach of principles of natural justice. Hence, the same is bad-in-law and may be set-a-side. 2. The Ld. CIT(A) erred in confirming the action of the A.O. of making addition of Rs.4,02,01,020/- under section 69C of the Income tax Act, 1961 (the Act) without appreciating the facts and circumstances of the case. Thus, the addition of Rs.4,02,01,020/- under section 69C of the Act and levy of tax as per the provisions of section 115BBE of the Act is not at all justified and the same may be deleted. 3. The Ld. CIT(A) failed to appreciate during the course of the survey under section 133A of the Act no discrepancy was found in the physical quantity of stock-in-trade of the Appellant i.e. the stock found during the course of survey was duly recorded in the books of accounts. The value of the stock was also reflected in the regular books of account as per the consistent method of valuation of stock followed by the Appellant. Thus Rs. 4,02,01,020/- is not an unexplained expenditure. Thus, provisions of section 69C are not attracted to the facts of ....
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....T(A) upheld the action of the Assessing Officer observing as under: "5. Appellate Decision: I have carefully perused the facts of the case, the grounds of appeal raised by the appellant and the order of the Assessing Officer. It is seen from the facts of the case that the appellant has not disputed the issue of valuation and the notings in the fortune note book pertaining to the closing stock found during the course of survey us 133A. It is also a fact that the difference of the valuation was offered by the assessee in the valuation of closing stock for the twer, Televant assessment year. This conduct of the appellant clearly proves that It had undervalued its closing stock. Further, it is seen from the submission of the appellant that even though it had offered the difference in the valuation of the closing stock, the source of the same was not explained by the appellant. Further, it is also seen that the appellant had not furnished item wise, carat wise, colour wise, clarity wise breakup of his opening stock, purchases made during the year, sales made during the year and the closing stock. The appellant has not furnished purchase wise evidences serine report exp....
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....l of the assessee submitted that during the course of survey no difference in the quantity of the stock was found and difference was only on account of valuation as per the books of accounts and valuation of stock as on the date of the survey. According to him, there was no unexplained expenditure noticed by the Assessing Officer therefore, invoking of section 115BBE is not justified. The Ld. Counsel of the assessee relied on the decision in the case of Shainrup Sampatram v. CIT [1953] 24 ITR 481 (SC) and in the case of Stone Age (P.) Ltd. v. DCIT [2020] 116 taxmann.com 930 (Jaipur-Trib.). 6.3.1 The Ld. Counsel of the assessee also referred to page 107 of the Paper Book, which is working of the closing stock for the purpose of profit and loss account including the undisclosed profit. 6.4 We have heard rival submission and perused the relevant material on record. It is undisputed that no difference in quantity of the stock was found during the course of the survey. The Assessing Officer has referred only difference in valuation of stock. It is not the case of the Assessing Officer that any of the purchases were not found to be recorded in the books of accounts. The difference ....