TaxTMI 
TaxTMI 
2024 (8) TMI 1747
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....CIT(A) has erred in restricting the addition ignoring the fact that impugned purchase shown to have been claimed by the assessee was bogus and no real transaction were undertaken through M/s. Rajan Gems, a bogus paper concern of Gautam Jain Group companies which were engaged in providing accommodation entry. 3. On the facts and circumstances of the case and law, the Id. CIT(A) has erred in restricting the addition to 5% of unverifiable purchases especially when assessee has taken accommodation entries of purchases from entity managed and controlled by Gautam Kumar Jain Group. 4. On the basis of the facts and circumstances of the case and in law, the Id. CIT(A) ought to have upheld the order of the Assessing Officer. 5. It is therefore prayed that the order of Id. CIT(A) may kindly be set aside that of the Assessing Officer be restored. 6. The appellant craves leave to add, alter, amend and/or withdraw any ground of appeal either before or during the course of hearing of the appeal. 2. The assessee in his cross appeal has raised following grounds of appeal: "1. On the facts and in the circumstances of the case as well as ....
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....cer (ITO), Ward 15(1)(1), Mumbai on 04/09/2014. Later ITO, Ward 2(3)(7), Surat issued notice under Section 142(1) r.w.s. 129 of the Act on 09/07/2015. During the assessment, the Assessing Officer noted that the assessee furnished various details as required from time to time. On verification of such details, it was noted that the assessee has shown purchases from Rajan Gems of Rs. 12.37 crores. Rajan Gems belongs to Gautam Jain group who was found to be fictitious on the search proceedings carried out by the Investigation Wing, Mumbai. The Assessing Officer referred the statement of Proprietor of Rajan Gems and Gautam Jain and their modus operandi about providing accommodation entry of sale, purchase, loan and advances. By referring such modus operandi, the Assessing Officer issued show cause notice dated 11/03/2016 to assessee as to why the purchases of Rs. 12.37 crores should not be added to the income of assessee. The assessee filed his reply dated 23/03/2016. Extract of reply is recorded in para 6 of assessment order. In the reply, the assessee objected against using statement of Gautam Jain and submitted that the assessee has already filed require....
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....onds at head office and branch office. The assessee is also registered under Sales Tax/VAT. The assessee furnished complete details. The Assessing Officer accepted the sales as correct and genuine. Once the sale is accepted, corresponding purchases cannot be treated as bogus. There is no mismatch and the quantity tallied in purchase and sales. Purchases cannot be rejected without disputing the sale which is settled position in law. The Assessing Officer failed to carry out any investigation and made high pitched assessment ignoring various evidences and judgment relied by the assessee. The assessee has total purchases of Rs. 25.43 crores. The Assessing Officer has not doubted the purchases other than Rajan Gems. The total purchases from Rajan Gems was Rs. 12.37 crores. Thus, remaining purchases of Rs. 13.06 crores were not doubted. The assessee reiterated that the entire sales were not doubted. There was no opening or closing stock of polished diamonds during the year, all details are furnished before the Assessing Officer. All purchases were sold in the same year, so there was no mismatch found during the assessment. The assessee also reli....
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.... 5%. The assessee has also raised additional ground of appeal which we have recorded above. 7. We have heard the submissions of the learned Authorised Representative (ld. AR) of the assessee and the learned Commissioner of Income Tax Departmental Representative (ld. CIT-DR) for the revenue. The ld. AR of the assessee submits that he has raised additional ground of appeal. In the additional ground of appeal, he has raised a legal issue that notice under Section 143(2) of the Act was issued by the ITO, Ward-15(1)(1), Mumbai who has no jurisdiction, which is invalid and the action based thereon in void ab initio. The ld. AR of the assessee submits that no additional facts are required to be brought on record for consideration and adjudication of additional ground of appeal. Facts relating to adjudication of additional ground of appeal is emanating from the assessment order itself. Such fact is an admitted fact that notice under Section 143(2) of the Act was issued by the ITO, Ward 15(1)(1), Mumbai, who has no jurisdiction. The ld. AR of the assessee submits that the assessee is filing his return of income showing the jurisdiction of ITO, Ward 3(....
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....er must necessarily be issued a notice under Section 143(2) within time prescribed in proviso to that Section. The ld. AR of the assessee further submits that the Surat Bench in case of ITO Vs Mahaveer Shantilal Jain in ITA No. 453/Srt/2019 dated 25/09/2023 and in the case of ITO Vs Balmukund M Vaishnav ITA No. 204 and 205/Srt/2019 dated 25/09/2023also held that omission on the part of Assessing Officer to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and cannot be dispensed with. The assessee also relied upon various other case laws wherein the assessment was quashed for want of notice under Section 143(2) of the Act. The ld. AR of the assessee finally submits that Lucknow Bench of the Tribunal in ACIT Vs Deepak Sehgal (2021) 126 taxmann.com 151 (Lucknow-Trib) held that "where assessee filed return in Kolkata but Assessing Officer Kanpur initiated assessment proceedings, since notice itself indicated that address of assessee had been printed as Kolkata which had been ignored and substituted by Kanpur address of assessee in handwriting and al....
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.... issued. All the ratio in all the cases relied by the ld. AR of the assessee is not applicable on the facts of the present case. On merit, the ld. CIT-DR for the revenue submits that the assessee is a beneficiary of bogus purchases shown from well-known entry provider. Such entry provider is not supplying any goods except providing accommodation entries. So far as rejection of books results are concerned, it is the satisfaction of the Assessing Officer, no specific procedure is prescribed for rejection of books result. The ld. CIT-DR for the revenue submits that though he will insist for disallowing the entire purchases shown from Rajan Gems, however, this Bench has taken a consistent view for disallowance of purchases @ 6% of similar purchases shown from well-known entry provider in a series of decisions which has been upheld by the Hon'ble Jurisdictional High Court. 10. In rejoinder submission, the ld. AR of the assessee submits that the Hon'ble Kolkata High Court in the case of Pr. CIT Vs Cosmat Traders (P) Ltd. (supra) held that on similar objection by the revenue, held that there cannot be any estoppel against the statute. The assessee has not waived his right to ra....
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....essing Officer, while transferring this case from Mumbai to Surat recorded the reason "Reason of transferring CBDT Notification dated 22/10/2014 [S.O. 2752(E)]". Copy of CBDT Notification dated 22/10/2014 [S.O. 2752(E)] is also attached, which defines the territorial jurisdiction of different Principal Commissioners of Ahmedabad, Surat and Valsad. For appreciation of facts, the copy of transfer aforesaid transfer order dated 22.12.2014 is extracted below; 13. Before us, the ld CIT-DR for the revenue also argued that PAN record of assessee was also lying in Mumbai, so initial notice under section 143(2) was issued by Assessing Officer at Mumbai. We find that the Assessing Officer also placed copy of details of "CBN PAN based Query -ITD", which shows jurisdiction of ITO-15(1)(1) Mumbai. Thus, on considering the aforesaid facts, we find that the ITO Mumbai has not committed any mistake in issuing notice under section 143(2). Therefore, the additional grounds of appeal raised by the assessee has no substance, which we reject. In the result, the additional ground of appeal raised by the assessee is dismissed. Now adverting to the main grounds of appeal raised by the....