TaxTMI 
TaxTMI 
2025 (12) TMI 1905
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....ncome Tax (Appeals), NAFC has erred in confirming the action of assessing officer in making addition of Rs. 2,24,75,072/under section 69C of the | T Act as unexplained expenditure. 3. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted. 2. At the outset, the learned counsel for the assessee invited our attention to the delay of 101 days in filing the present appeal, as noted by the Registry. It was submitted that the order of the learned CIT(A) was not communicated to the assessee through the registered primary or secondary e-mail address. As a result, the assessee remained unaware of the passing of the appellate order and came to know of it only upon subsequently accessing the Income-tax Portal to verify the status of the proceedings after a considerable lapse of time. It was thus contended that the delay was neither deliberate nor attributable to any lack of diligence, but occurred for bona fide and unavoidable reasons. 2.1 We have considered the rival submissions on the issue of condonation of delay. In our considered view, the assessee has placed on record a reasonable an....
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....erns controlled by the Jain/Choudhary group were mere paper entities. The so-called directors and proprietors were found to be name-lenders with no control over business operations. Statements recorded under oath revealed that these entities neither maintained nor dealt in any physical stock of diamonds and were only issuing accommodation bills in lieu of commission. 2.6 In particular, Shri Sanjay Choudhary, Director of M/s Nazar Impex Pvt. Ltd., admitted that the company was engaged in "bill shopping" and that no physical stock of diamonds was ever held by it. The detailed modus operandi explained in his statements demonstrated that the entire business was confined to maintaining books of accounts without any corresponding movement of goods. 2.7 The Assessing Officer further observed that, despite opportunity, the assessee failed to produce any evidence of actual delivery of diamonds such as delivery challans, transport documents, stock registers, or inward registers. Mere production of invoices and bank statements was held to be insufficient to establish the genuineness of the transactions, particularly in the face of overwhelming incriminating material gathered during sear....
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....n 145(3). The addition was made in full, and penalty proceedings under section 271(1)(c) were initiated separately. 3. On further appeal, the Ld. CIT(A) rejected the ground challenging the validity of the reassessment observing as under: "7.1 The appellant has challenged the reopening of the assessment u/s 148 of the act. The appellant filed the return of income on 27.09.2011 for the AY 2011-12 declaring income of Rs.1,83,630. The AO received information from the Investigation wing that the appellant availed accommodation entry from the group ShriRajendra Jain/ Sanjay Chudary/ Dharmichand Jain and this was unearthed during the search action u/s 132 of the act on 03.10.2013. In his statement, ShriRajendra Jain admitted that the group controlled by him was indulging in providing accommodation entry and the appellant was one of the beneficiaries. The AO based on this information reopened the assessment and issued notice u/s 148 of the act dated 30.03.2018 for which the appellant did not file any response. The Assessing Officer reopened the assessment based on the information received from the Investigation Wing and the appellant had made bogus purchases from one of the par....
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.... In this regard, it is pertinent to mention that in the statement recorded under Sec.132(4), the director of the company had admitted the rate of commission received by him for raising bogus bills and he had also stated that the beneficiaries were already identified and only commission income was earned by the company and the corresponding sales for supplying diamonds were bogus sales. The financial statement of the appellant has been examined. Firstly, the stock details as per the audit report annexed with the appeal papers have been carefully verified which shows: Opening stock NIL Purchases 3009.10 carats Sales 2783.59 carats Closing Stock 225.51 carats Appellant has admitted the purchases at Rs.6,45,32,192 and the sales at Rs.6,06,45,589 and the gross profit was admitted at Rs.9,49,612 and the closing stock was admitted at 48,36,215. Further, it could be seen from the administrative expenditure, the commission and brokerage were stated to be Rs.5,00,870 and there is no other significant expenditure found in the profit and loss account as all other expenses were regular sundry expenses totaling Rs. 1,53,671. Thus, it could be seen ....
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....rch 2011. The sundry creditor shows a sum of Rs.1.02 crores. No creditor would allow such a waiting period to settle the dues in this line of business. It is seen from the bank account of SBI, the entries start from 10.06.2010 and there is a deposit transfer from Bank of India to the extent of Rs.6,00,000 and on 06.07.2010 there is a transfer from Indian Overseas Bank for a sum of Rs.79,69,639. Not only in this month and even in other months also there were transfers for IOB Ahmedabad. Appellant stated that the current accounts operated by him as SBI and Indus Ind Bank. Hence, the details of these deposit transfers from other bank accounts were not provided. Since the financial statement provided by the appellant does not project the source for making initial investment to do such a business and considering the volume of transactions which is nearly Rs.6 crores, this gives rise to the suspicion whether there were actual movement of stock in respect of the above items which were purchased from M/s NazarImpex P Ltd. as the appellant made maximum purchases of nearly 1256.18 carats of diamond and the transactions really took place. Thus, after comparing the stock register and ....
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....ntirety, as this would lead to an illogical result and render the trading account unworkable. It was submitted that the assessee had purchased 1,256.18 carats of diamonds and, if such purchases were treated as bogus, the stock position would turn negative, which was neither alleged nor demonstrated by the Assessing Officer. 4.3 It was further contended that the Assessing Officer relied exclusively on third-party statements recorded during search and survey proceedings without granting the assessee an opportunity of cross-examination, thereby violating the principles of natural justice. It was also argued that there was no material to establish that the assessee paid any commission or that unaccounted cash was routed back to the assessee. The learned counsel sought to distinguish the decision of the Hon'ble Bombay High Court in Kanak Impex Pvt. Ltd. (172 taxmann.com 283), submitting that the facts of the present case were materially different and, therefore, the said decision was not applicable. 4.4 Per contra, the learned Departmental Representative supported the orders of the lower authorities and pointed out certain deficiencies or contradiction in the signature of the Dire....
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....nd not in actual trading of diamonds. 5.2 During the course of assessment proceedings, the Assessing Officer furnished to the assessee copies of statements recorded from the key persons of the supplier concern. Despite being afforded such opportunity, the assessee neither sought cross-examination of the deponents nor furnished any rebuttal to the incriminating material. The silence of the assessee in the face of such adverse evidence assumes significance. 5.3 Before us, the learned Departmental Representative further pointed out discrepancies in the signatures appearing on the confirmation letters, purchase bills, and statements recorded during survey proceedings in the case of M/s Nazar Impex Pvt. Ltd. These discrepancies were not satisfactorily explained by the assessee. Significantly, the assessee also failed to produce the Director or authorised representative of M/s Nazar Impex Pvt. Ltd. either before the Assessing Officer or before the first appellate authority to substantiate the genuineness of the transactions. 5.4 In such circumstances, the claim that the purchases were genuine remains unsubstantiated. The reliance placed by the assessee on bank statements, ledger....