AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1077
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....itioner also challenged (iv) a notice dated June 02, 2022 issued under Section 148A(b) of the Act treating the notice dated March 31, 2021 as having been issued under Section 148A(b) of the Act purportedly in view of the decision of the Apex Court in the case of UOI V/S Ashish Agarwal [2022] 444 ITR 1 (SC); (v) an order dated July 28, 2022 passed under Section 148A(d) of the Act; and (vi) a further notice dated July 28, 2022 under Section 148 of the Act for the A.Y.2013-14. 3. The facts relevant for the purpose of this petition are that the Petitioner filed its return of income for the year under consideration declaring a total income of Rs. 12,21,21,240/-. The case of the Petitioner was selected for scrutiny and the Assessing Officer called for and scrutinized the most comprehensive details of the Petitioner's business during the relevant previous year including purchases, trade payables and expenses incurred. In particular, the Assessing Officer called for details of the entire sales made by the Petitioner during the year. By letter dated November 18, 2016, the Petitioner provided details of the entire sales made during the year of Rs. 448.60 crores,....
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....This led to critical analysis of banking transactions with other entities including its group entities, viz. M/s. Samkit Diamond (Acc.No.550011026860), M/s. Sambhav Impex Acc. No. 550011047371) & M/s. R. J. Export s(Acc.no. 550011046681), Kinjal Gems Pvt. Ltd., (Acc. No.550011029035) and Shree Bhairav Star Jewels Pvt. Ltd. (Acc.no.550011028178) and their financial statements and return of income. 2.3 In the process of investigation, it was noticed that the assessee, M/s. Ankit Gems Pvt. Ltd.) is a beneficiary of accommodation entries of unsecured loans to the extent of Rs. 4,06,24,999, with M/s. Shree Bhairav Star Jewels Pvt. Ltd. (PAN: AAKCS9729H) ... 2.5 After verification of the return of income filed by the assessee for A.Y.2013-14, Balance Sheet and Profit & Loss Account for the year ending 31-03-2013 and other details available on record, I have "reason to believe" that income chargeable to tax, to the extent of Rs. 4,06,24,999 has escaped assessment for reasons of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for A.Y.2013-14. Hence, the assessment of the assessee for AY.2013-14 is to....
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....en with the approval of the higher authorities in terms of Section 151 of the Act, and therefore, all the formalities have been correctly observed. The objections of the Petitioner were therefore rejected. 8. Thereafter, Respondent No. 1 passed another order dated March 08, 2022 purportedly disposing off the further objections raised by the Petitioner. In this order, Respondent No. 1 merely stated that the Petitioner has entered into transactions with suspicious entities which have to be verified, and therefore, the objections of the Petitioner were rejected. Respondent No. 1, along with this order, also furnished a copy of the sanction granted by Respondent No. 3 under section 151 of the Act. Respondent No. 3 has, in the said sanction, merely recorded "Yes, I am satisfied with the reasons recorded". 9. The Petitioner again pointed out vide letter dated March 12, 2022 that the objections of the Petitioner have not been disposed off objectively as the objections of the Petitioner have not been considered by Respondent No. 1. The Petitioner also raised an objection with respect to the validity of the approval under Section 151 of the Act which was provided for the first time wi....
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....d June 02, 2022 under Section 148A(b) of the Act. 14. The Petitioner filed a response to the said notice submitting that the effect of the ad-interim order was that the proceedings are stayed and therefore, the notice dated June 02, 2022 could not have been issued. The Petitioner also submitted that since the original notice under Section 148 of the Act was issued on March 31, 2021, the question of applicability of UOI v. Ashish Agarwal (supra) and the amended provisions of Section 147 to 151 of the Act does not arise, since the same came into effect from April 01, 2021. 15. Respondent No. 1 however proceeded to pass the impugned order dated July 28, 2022 under Section 148A(d) of the Act, once again stating that information is received from DDIT (Inv.), Surat, and therefore, income chargeable to tax to the extent of Rs. 4,06,24,999/-has escaped assessment. 16. Aggrieved, the Petitioner amended the present Petition to challenge the subsequent notices as well as orders passed by Respondent No. 1. In the meantime, on account of recovery of part of the demand for the relevant assessment year, this Court on September 23, 2025 passed the following order - 12. In view of....
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....from "M/s Ankit Gems Pvt. Ltd.", which fact has been pointed out to Respondent No. 1 on a number of occasions. Further, the fact that the Petitioner had not obtained any loan from Shree Bhairav Star Jewels Pvt. Ltd., is clear from the face of the record and in fact the Petitioner has sold diamonds to Shree Bhairav Star Jewels Pvt. Ltd. totalling to Rs. 6,58,93,840/-. He pointed out that the invoice-wise break up of sales to Shree Bhairav Star Jewels has been furnished to Repsondent No. 1, and also pointed out how a particular set of invoices aggregate exactly to Rs. 4,06,24,999/-. He submitted that as the sales have already been offered to tax by the Petitioner and assessed in the assessment order dated December 22, 2016, the question of escapement of income does not arise. For all these reasons, Mr. Mistri submitted that the impugned notice dated March 31, 2021 and all other notices and orders emanating therefrom, be quashed and set aside. 19. On the other hand, Mr. Sharma, the learned counsel for the Respondents, relied on the additional affidavit dated June 23, 2025 filed by Respondent No. 1, wherein he claims that the name of "M/s Ankit Gems Pvt. Ltd." as the assessee was in....
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....further submitted that the investigation report has been disclosed to the Petitioner for the first time along with the Affidavit. He draws our attention to the investigation report filed along with the additional affidavit. He draws our attention to the fact that the said investigation report notes bank accounts held by M/s Seven Star Jewels and other entities, who have transacted with M/s Seven Star Jewels, one of which is Shree Bhairav Star Jewels Pvt. Ltd. The report then analyses the said bank accounts as well as the books of accounts of Shree Bhairav Star Jewels Pvt. Ltd, and comes to the conclusion that Shree Bhairav Star Jewels Pvt. Ltd. has received huge interest amount on 'loans and advances'. It then sets out a list of 28 parties to whom Shree Bhairav Star Jewels Pvt. Ltd. has allegedly advanced unsecured loans and has received interest thereon. Admittedly, the name of the Petitioner does not appear in this list of 28 parties. The learned senior counsel for the Petitioner points out that the conclusion set out in the report, therefore, ex facie does not apply to the Petitioner. The report also refers to certain other transactions in the bank account of Shree Bhairav Star ....
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.... with Shree Bhairav Star Jewels Pvt. Ltd. totalling to Rs. 6,58,93,840/-. The breakup of invoices, the details of sales, the proof of proceeds on sale being credited to the bank account of the Petitioner, and the explanation as to how certain invoices would add up to the amount of Rs. 4,06,24,999/- was duly explained. This amount has already been offered to tax by the Petitioner in its return of income. These facts are not disputed by the Respondents in the affidavits filed by them. Under such circumstances, there is no income chargeable to tax which has escaped assessment in case of the Petitioner at all. The sum of Rs. 4,06,24,999/-has already been offered to tax, and there is no further sum that can be added to the income of the Petitioner insofar as these transactions are concerned. Accordingly, we are of the view that the action of Respondent No. 1 was unfounded and based on a complete non-application of mind. Respondent No. 1 has also ignored the submissions and explanations given by the Petitioner and has drawn an erroneous inference from the Investigation wing's report. 25. Secondly, it is clear even from the Investigation wing report [annexed in the additional affidavit....