M/s Radhe Sham Jain Diamonds Jewellers Pvt. Ltd., Ludhiana V. DCIT, CC-III, Ludhiana

ITA 398/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2462 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-02-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJEEV GUPTA
• Keywords: Reopening of assessment; Bogus purchase; Question of law; Valuation report
• Section: 143(3); 133(6); 292BB; 143(2); 13; 145(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS. 398 TO 401/CHD/2019 / ASSESSMENT YEARS : 2009-10 & 2012-13 M/S RADHE SHAM JAIN DIAMOND JEWELLERS PVT LTD., B-XIX, 549/1, COLLEGE ROAD, FOUNTAIN CHOWK, CIVIL LINES, LUDHIANA THE DCIT, CENTRAL CIRCLE - III LUDHIANA ./PAN NO: AADCR8437J / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI RAJEEV GUPTA, CA ' ! / REVENUE BY : SMT. ANITA MEENA, JCIT # $ % /DATE OF HEARING : 04.02 2020 &'() % / DATE OF PRONOUNCEMENT : 28.02.2020 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEALS FOR FOUR CONSECUTIVE ASSESSME NT YEARS 2009- 10 TO 2012-13 HAVE BEEN PREFERRED BY THE ASSESSEE A GAINST THE SEPARATE ORDERS DATED 16.01.2019 OF THE COMMISSIONER OF INC OME TAX (APPEALS)- 5, LUDHIANA [HEREINAFTER REFERRED TO AS CIT (A)] RAISING IDENTICAL GROUNDS. ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 2 2. SINCE THE FACTS AND ISSUE INVOLVED IN ALL THE AP PEALS ARE IDENTICAL, HENCE, THE SAME WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY THIS COMMON ORDER. 3. THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 BEARING ITA NO.401/CHD/2019 IS TAKEN AS A LEAD CASE FOR THE PURPOSE OF DISCUSSION. ITA NO. 401/CHD/2019(A.Y. 2012-13) 4. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOW ING GROUNDS OF APPEAL:- 1. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE RE-ASSESSMENT IS LIABLE TO BE QUASHED ON THE GROUND THAT THE STATUTORY NOTICE U/S 143(2) WAS NOT SERVED ON THE ASSESSEE. 2. THAT THE HON'BLE CIT (A]-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE ADDITION HAS BEEN MADE BY THE AO WITHOUT REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961. 3. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN CONFIRMING THE ADDITION OF RS. 128996/- ON ACCOUNT OF G.P. ON SO CALLED BOGUS PURCHASES FOR RS. 2149920/- AND FURTHER ENHANCING THE ADDITION TO RS. 2149920/-, WHICH IS AGAINST THE LAW AND FACTS. 4. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN DISMISSING THE PLEA OF THE ASSESSEE FOR QUASHING THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 3 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 5. GROUND NO.1 : THE ASSESSEE VIDE GROUND NO.1 HAS CONTESTED THE VALIDITY OF THE ASSESSMENT FRAMED U/S 143(3) READ W ITH SECTION 147 OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT STATUTO RY NOTICE U/S 143(2) WAS NOT ISSUED OR SERVED UPON THE ASSESSEE. THE LD. COUNSEL IN THIS RESPECT HAS PLACED RELIANCE ON THE COPIES OF THE AS SESSMENT RECORDS / ORDER SHEET OF THE ASSESSMENT PROCEEDINGS, WHICH IS PLACED AT PAGES 7 TO10 OF THE PAPER BOOK. 6. WE HAVE GONE THROUGH THE SAID ORDER SHEET ENTRIE S AND FIND THAT THERE IS NO MENTION IN ANY OF THE ORDERS OF THE ASS ESSING OFFICER OF DIFFERENT DATES RELATING TO THE ASSESSMENT PROCEEDI NGS CARRIED OUT IN THE CASE OF THE ASSESSEE OF ISSUANCE OF ANY NOTICE U/S 143(2) OF THE INCOME TAX ACT. 7. THE LD. DR, AFTER PERUSAL OF THE RECORD HAS FAI RLY AGREED THAT IN THIS CASE NO NOTICE U/S 143 (2) WAS ISSUED BY THE A SSESSING OFFICER TO THE ASSESSEE EITHER BEFORE OR DURING THE FRAMING O F THE ASSESSMENT U/S 143(3) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSE E HAS SUBMITTED THAT THE ISSUE IS VERY WELL SETTLED ON THIS POINT THAT E VEN TO ASSUME JURISDICTION BY THE ASSESSING OFFICER TO FRAME REAS SESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT, STATUTORY NOTICE U/S 143(2) IS ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 4 MANDATORILY REQUIRED TO BE ISSUED. THE LD. COUNSEL IN THIS RESPECT HAS MADE THE FOLLOWING SUBMISSIONS:- GROUND OF APPEAL NO. ASSESSING OFFICERS FINDINGS CIT(A)S FINDINGS AR SUBMISSIONS. 1. THAT THE HON,BLE CIT(A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE RE-ASSESSMENT IS LIABLE TO BE QUASHED ON THE GROUND THAT THE STATUTORY NOTICE U/S 143(2) WAS NOT SERVED ON THE ASSESSEE. RE-ASSESSMENT ORDER PASSED WITHOUT ISSUING STATUTORY NOTICE U/S 143(2) OF THE ACT. DISMISSED THE ASSESSEE'S GOUND BY TAKING PLEA OF SECTION 292BB. PARA NO. 4.6 AT PAGE NO. 15 - HERE ISSUE IS NOT REGARDING SERVICE OF NOTICE BUT IN FACT NO NOTICE ISSUED U/S 143(2) AT ALL DURING THE RE- ASSESSMENT PROCEEDINGS. COPY OF ORDER SHEET PLACED AT PB FOLIO 7-10. ALSO PARA 1 OF ASSESSMENT ORDER IS SELF EXPLANATORY I.E. NO NOTICE ISSUED U/S 143(2) OF THE ACT. - HON'BLE APEX COURT IN THE CASE OF CIT VS. LAXMAN DASS KHANDELWAL HELD; IN PARA 9, THE SECTION I.E. 292BB IS NOT INTENDED TO CURE COMPLETE ABSENCE OF NOTICE ITSELF. - HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT VS. JAI SHIV SHANKAR TRADERS PVT. LTD. HELD; IN PARA 19, THE FAILURE BY THE AO TO ISSUE A NOTICE TO ASSESSEE U/S 143(2) AFTER FILING THE RETURN PURSUANT TO A NOTICE ISSUED U/S 148 OF THE ACT, IS FATAL TO THE ORDER OF REASSESSMENT. - HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF PCIT VS. KAMLA DEVI SHARMA HELD; IN PARA NO.18 SAME FINDING I.E., THE FAILURE BY THE AO TO ISSUE A NOTICE TO ASSESSEE U/S 143(2) AFTER FILING THE RETURN PURSUANT TO A NOTICE ISSUED U/S 148 OF THE ACT, WAS FATAL TO THE ORDER OF RE-ASSESSMENT. - HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT VS. SILVER LINE & ANR. HELD; IN PARA 23, THAT A RE- ASSESSMENT ORDER CANNOT BE PASSED WITHOUT COMPLIANCE WITH THE MANDATORY REQUIREMENT OF NOTICE BEING ISSUED BY THE AO TO THE ASSESSEE UNDER SECTION U/S 143(2) OF THE ACT - HON'BLE MADRAS HIGH COURT IN THE CASE OF SAPTHAGIRI FINANCE & INVESTMENTS VS. ITO HELD; IN PARA NO.13 I.E. WE ARE OF THE VIEW THAT IN COMPLETING THE ASSESSMENT UNDER SECTION 148 OF THE ACT, COMPLIANCE OF THE PROCEDURE LAID DOWN UNDER SECTIONS 142 AND 143(2) IS ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 5 MANDATORY. - HON'BLE P&H HIGH COURT IN THE CASE OF CIT VS. CEBON INDIA LTD. HELD; IN PARA NO.5, ABSENCE OF NOTICE CANNOT BE HELD TO BE CURABLE UNDER S.292BB OF THE ACT. - HON'BLE ITAT CHANDIGARH IN THE CASE OF SANJEEV AGGARWAL VS. DCIT HELD; IN PARA 10 LAST LINES I.E. WE HEREBY QUASH THE ORDER OF THE ASSESSING OFFICER, WHICH WAS MADE WITHOUT ISSUE OF NOTICE U/S & 143(2) OF THE ACT. 8. THE LD. DR, ON THE OTHER HAND, HAS RELIED UPON T HE PROVISIONS OF SECTION 292BB OF THE ACT TO SUBMIT THAT IF THE ASS ESSEE HAS NOT RAISED ANY OBJECTION OF SERVICE OF NOTICE, APPEARED IN ANY PROCEEDINGS OR COOPERATED IN AN ENQUIRY RELATING TO THE ASSESSMENT OR RE-ASSESSMENT AND NO OBJECTION HAS BEEN RAISED REGARDING THE SERVICE OF NOTICE UPON HIM, SUCH ASSESSEE IS PRECLUDED FROM TAKING ANY OBJECTI ON IN THIS RESPECT AT A LATER STAGE. THE LD. DR IN THIS RESPECT HAS ALSO RE LIED UPON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF JOSH BUILDERS AND DEVELOPER (P) LTD. VS PCIT (2016) 389 ITR 314(P&H). 9. IN REBUTTAL, THE LD. AR OF THE ASSESSEE HAS SUBM ITTED THAT THE CASE LAW RELIED UPON BY THE REVENUE OF HON'BLE HIGH COUR T OF PUNJAB & HARYANA IN THE CASE OF JOSH BUILDERS & DEVELOPERS (P') LTD. VS PCIT (SUPRA) IS REGARDING THE VALIDITY AND SERVICE OF NOTICE ISS UED U/S 143(2) OF THE ACT, WHILE IN THE PRESENT CASE THERE IS COMP LETE ABSENCE OF NOTICE U/S 143(2) I.E NO NOTICE WAS ISSUED AT ALL EITHER B EFORE OR AFTER FILING OF THE RETURN IN RESPONSE TO NOTICE ISSUED U/S 148 OF THE ACT. IT WAS, ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 6 THEREFORE, SUBMITTED THAT THE SAID DECISION IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HAVE ALSO GONE THROUGH THE RECORD. SO FAR AS THE RELIANCE OF THE L D. DR UPON THE PROVISIONS OF SECTION 292BB OF THE ACT IS CONCERNED , THE ISSUE IS NOW WELL SETTLED BY THE HON'BLE SUPREME COURT IN THE CA SE OF CIT VS LAXMAN DASS KHANDELWAL CIVIL APPEAL NO. 6261-6262 OF 2019 DECIDED VIDE ORDER DATED AUGUST 13, 2019, WHEREIN, THE HON 'BLE SUPREME COURT IN PARA 8 TO10 OF THE ORDER HAS OBSERVED AS UNDER:- 8. THE LAW ON THE POINT AS REGARDS APPLICABILITY OF THE REQUIREMENT OF NOTICE UNDER SECTION 143(2) OF T HE ACT IS QUITE CLEAR FROM THE DECISION IN BLUE MOON'S CASE. THE ISSUE THAT HOWEVER NEEDS TO BE CONSIDERED IS THE IMPACT OF SECTION 292BB OF THE ACT. 9. ACCORDING TO SECTION 292BB OF THE ACT, IF THE ASSESSEE HAD PARTICIPATED IN THE PROCEEDINGS, BY WA Y OF LEGAL FICTION, NOTICE WOULD BE DEEMED TO BE VALID E VEN IF THERE BE INFRACTIONS AS DETAILED IN SAID SECTION . THE SCOPE OF THE PROVISION IS TO MAKE SERVICE OF NOTICE HAVING CERTAIN INFIRMITIES TO BE PROPER AND VALID I F THERE WAS REQUISITE PARTICIPATION ON PART OF THE ASSESSEE. IT IS, HOWEVER, TO BE NOTED THAT DIE SECT ION DOES NOT SAVE COMPLETE ABSENCE OF NOTICE. FOR SECTI ON 292BB TO APPLY, THE NOTICE MUST HAVE EMANATED FROM THE DEPARTMENT. IT IS ONLY THE INFIRMITIES IN THE M ANNER OF SERVICE OF NOTICE THAT THE SECTION SEEKS TO CURE . THE SECTION IS NOT INTENDED TO CURE COMPLETE ABSENCE OF NOTICE ITSELF. 10. SINCE THE FACTS ON RECORD ARE CLEAR THAT NO NOT ICE UNDERSECTION143(2) OF THE ACT WAS EVER ISSUED BY TH E DEPARTMENT, THE FINDINGS RENDERED BY THE HIGH COURT AND THE TRIBUNAL AND THE CONCLUSION ARRIVED AT WERE CORRECT. WE, THEREFORE, SEE NO REASON TO TAKE A DIF FERENT VIEW IN THE MATTER. ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 7 THE HON'BLE SUPREME COURT, THUS, HAS CATEGORICALLY HELD THAT SECTION 292 BB IS NOT INDEED TO CURE COMPLETE ABSENCE OF NO TICE ITSELF. SO FAR AS THE MANDATORY REQUIREMENT OF ISSUE OF NOTICE U/S 143(2) OF THE ACT IN THE CASE OF RE-ASSESSMENT PROCEEDING CARRIED OUT U/ S 147 OF THE ACT IS CONCERNED, THE ISSUE HAS BEEN SETTLED BY THE HON'BL E DELHI HIGH COURT IN THE CASE OF PCIT VS JAI SHIV SHANKAR TRADERS PVT L TD. (2016) 383 ITR 448 (DELHI), WHEREIN, THE HON'BLE DELHI HIGH COURT HELD THAT THE FAILURE OF THE ASSESSING OFFICER TO ISSUE A NOTICE TO THE A SSESSEE U/S 143(2) OF THE ACT SUBSEQUENT TO THE FILING OF THE RETURN PURS UANT TO THE NOTICE ISSUED U/S 148 OF THE ACT IS FATAL OF THE ORDER OF THE RE-ASSESSMENT. IN VIEW OF THIS, THE ASSESSMENT / RE-ASSESSMENT FRAMED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT READ WITH SECTION 147 OF THE ACT IS LIABLE TO BE QUASHED. WE ORDER ACCORDINGLY. IN VIEW OF T HIS, THE CONSEQUENTIAL ADDITION PURSUANT TO SUCH INVALID ASSESSMENT FRAMED WILL HAVE NO LEGS TO STAND AND ARE ACCORDINGLY ORDERED TO BE DELETED. 11. IN VIEW OF OUR FINDINGS GIVEN ABOVE ON THE LEGA L ISSUE, THE GROUNDS TAKEN BY THE ASSESSEE ON MERITS HAVE BECOME ACADEMI C IN NATURE. HOWEVER, FOR THE SAKE OF COMPLETENESS, THE GROUNDS ON MERITS ARE ALSO DEALT WITH. 12. GROUND NOS 2 & 3 : VIDE GROUND NOS. 2 & 3, THE ASSESSEE HAS AGITATED THE CONFIRMATION OF ADDITION OF RS. 1,28, 996/- ON ACCOUNT OF ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 8 GP RATE APPLIED ON ALLEGED BOGUS PURCHASES AND FURT HER, THE ENHANCEMENT TO THE ADDITION BY THE CIT(A) OF RS. 21,49,920/- PLEADING THAT SUCH AN ADDITION WAS NOT WARRANTED AS NEITHER ANY DEFECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE POINTED OUT NOR THE BOOKS OF ACCOUNT WERE REJECTED U/S 145(3) OF THE ACT. THAT EVEN THE ALLEGED BOGUS PURCHASES HAVE BEEN PRESUMED BY THE LOWER AU THORITIES WITHOUT THERE BEING ANY EVIDENCE OF SUCH BOGUS PURCHASES. THE LD. AR OF THE ASSESSEE IN THIS RESPECT HAS MADE THE FOLLOWING SUB MISSIONS:- GROUND OF APPEAL NO. ASSESSING OFFICERS FINDINGS CIT(A)S FINDINGS AR SUBMISSIONS. 2. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE ADDITION HAS BEEN MADE BY THE AO WITHOUT REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961. IN RE-ASSESSMENT BOOKS WERE NOT REJECTED BY AO PARA 4 .5 AT PAGE NO.15 OF CIT(A) ORDER HELD; THE ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF THIS INFORMATION AND FOR DOING SO, THERE WAS NO REQUIREMENT TO REJECT THE BOOKS OF ACCOUNTS U/S 145(3) BECAUSE APART THIS ITEM, NO OTHER ADDITION HAS BEEN MADE DURING THE RE- ASSESSMENT PROCEEDINGS. -THERE IS NO OTHER ADVERSE FINDING EXCEPT INFORMATION FROM INVESTIGATION WING. -ASSESSEE IS AN TRADING CONCERN AND SUPPLIED THE DAY TO DAY STOCK REGISTER OF DIAMONDS DURING RE- ASSESSMENT PROCEEDINGS AT PB FOLIO 53 TO71 SHOWING THE RECEIPT FROM NAZAR IMPEX AS WELL AS SALE OF DIAMONDS. - EVEN BOOKS REJECTED U/S 145(3) IN ORIGINAL ASSESSMENT WERE NOT UPHELD BY THE CIT(A) AS WELL AS HON'BLE CHANDIGARH TRIBUNAL (COPY ENCLOSED, PARA 11 AT PAGE NO.7 OF THE ITAT'S ORDER) - SALES AS WELL AS VALUE IN CLOSING STOCK IN RESPECT OF THE PURCHASES FROM NAZAR IMPEX WERE ACCEPTED BY THE REVENUE, THUS THE PURCHASES CAN NOT BE DISALLOWED WITHOUT REJECTING BOOKS OF ACCOUNTS IN THE CASE OF TRADING CONCERN. 3. THAT THE HON'BLE CIT (A )-5 HAS ERRED IN CONFIRMING THE ADDITION OF RS. 128996/- ON ACCOUNT OF G.P. ON SO CALLED BOGUS PURCHASES FOR RS. 2149920/- AND FURTHER ENHANCING THERE IS NO OTHER ADVERSE FINDING EXCEPT INFORMATION FROM INVESTIGATION WING. PARA 4.2, 8 TH LINE FROM BELOW OF PAGE 13 OF CIT(A)'S ORDER; SINCE THE ITEMS DO NOT HAVE SPECIFIC IDENTITY NUMBER, HENCE IT CANNOT BE -BOGUS PURCHASES NOT ESTABLISHED BY THE AO. - PB FOLIO 42 ; IF PURCHASE OF DIAMONDS EXCLUDED FROM PURCHASES AS WELL AS STOCK IN TRADE, IT RESULTS TO LOSS OF RS.20,16,844/-, CANNOT BE SAID THAT ASSESSEE MADE EFFORTS TO REDUCE THE PROFIT. - HON'BLE APEX COURT IN THE CASE OF ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 9 THE ADDITION TO RS. 2149920/-, WHICH IS AGAINST THE LAW AND FACTS. VERIFIED WHETHER THE DIAMONDS SHOWN AS PURCHASED FROM NAZAR IMPEX WERE INCLUDED IN THE STOCK AND ONLY THOSE PARTICULAR ITEMS HAVE BEEN SOLD AND INCLUDED IN SALES DECLARED BY THE ASSESSEE. PARA 4.2,19 ;H LINE FROM TOP OF THE PAGE NO.14; AS THE ASSESSEE HAS DEBITED THE AMOUNT OF PURCHASE FROM NAZAR IMPEX IN THE TRADING ACCOUNT THIS HAS LED TO SUPPRESSION OF THE PROFIT TO THE EXTENT OF BOGUS PURCHASES. PCIT VS. TEJUA ROHIT KUMAR KAPADIA (PB FOLIO 3 TO 6) HELD; IN PARA 3, THE PURCHASES WERE DULY SUPPORTED BY BILLS AND PAYMENT WERE MADE BY ACCOUNT PAYEE CHEQUE, CONFORMATION OF TRANSACTIONS, NO EVIDENCE THAT THE AMOUNT WAS RECYCLED BACK TO ASSESSSEE, PARTICULARLY TRADER HAD ALSO SHOWN SALES OUT OF PURCHASES MADE, WHICH WERE ACCEPTED BY REVENUE. NO QUESTION OF LAW ARISES. -CONFIRMATION U/S 133(6) IS PLACED AT PB FOLIO 11 TO 32. -HON'BLE BOMBAY HIGH COURT IN THE CASE OF PCIT VS. PARAMSHAKTI DISTRIBUTORS PVT. LTD. CONCL; WHERE AO HAS NOT REJECTED EITHER PURCHASES OR THE SALES MADE OUT OF THE SAID PURCHASES, IT IS ALLOWED TO APPLY THE PRINCIPLE OF TAXING THE PROFIT EMBEDDED IN SUCH PURCHASES COVERED BY BOGUS BILLS, INSTEAD OF DISALLOWING THE ENTIRE EXPENDITURE. - HON'BLE BOMBAY HIGH COURT IN THE CASE OF PCIT VS. PINAKI D. PANANI, ALLOWED TO APPLY THE PRINCIPLE OF TAXING THE PROFIT EMBEDDED IN SUCH PURCHASES COVERED BY BOGUS BILLS, INSTEAD OF DISALLOWING THE ENTIRE EXPENDITURE. 13. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED TH AT THE ASSESSING OFFICER HAS RELIED UPON THE REPORT OF THE INVESTIGA TION WING THAT THE ASSESSEE WAS INVOLVED IN BOGUS PURCHASES. FURTHER, THE LD. DR HAS RELIED UPON THE OBSERVATION OF THE CIT(A) MADE IN P ARA 4.2 AT PAGE 13 OF THE IMPUGNED ORDER OF THE CIT(A) TO SUBMIT THAT THE LD. CIT(A) HAS OBSERVED THAT ITEMS DO NOT HAVE ANY SPECIFIC IDENTI FY NUMBER, HENCE, IT CANNOT BE VERIFIED WHETHER THE DIAMONDS SHOWN AS PU RCHASED FROM M/S NAZAR IMPEX PVT LTD. WERE INCLUDED IN THE STOCK AN D THAT THE SAME HAVE BEEN INCLUDED IN THE SALES DECLARED BY THE ASS ESSEE. ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 10 14. IN REBUTTAL, THE LD. COUNSEL FOR THE ASSESSEE H AS RELIED UPON PAGE 50 OF THE PAPER BOOK TO SUBMIT THAT ASSESSEE HAD DU LY SUBMITTED THE RELEVANT DETAILS NOT ONLY DURING ASSESSMENT PROCEE DINGS BUT ALSO DURING RE-ASSESSMENT PROCEEDINGS. PAGE 50 IS THE COPY OF T HE LETTER DATED 29.12.2019 SUBMITTED TO THE ASSESSING OFFICER DURIN G THE RE-ASSESSMENT PROCEEDINGS, POINT 9 OF WHICH IS RELEVANT, WHICH F OR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER:- COPY OF ACCOUNT WITH M/S NAZAR IMPEX PVT. LTD. IS ENCLOSED. IT IS PERTINENT TO MENTION HERE THAT DURING THE ASS ESSMENT PROCEEDINGS ASSESSEE HAD PROVIDED THE COMPLETE PART ICULARS OF PURCHASES, SALES, ITEM WISE QUANTATIVE DETAILS, STO CK REGISTER, TRADING ACCOUNT OF DIAMOND, DATE WISE MOVEMENT OF D IAMONDS ETC. LD. AO. ALSO HAD VERIFIED THE SAME. CONFIRMATI ON FROM THE PARTY IS ON RECORD. EVEN ON THE DATE OF SEARCH I.E. 14.03.2012 PHYSICAL STOCK SUMMARY HAD PREPARED AND THERE WAS N EGLIGIBLE DIFFERENCE IN STOCK OF DIAMONDS, AS PER BOOKS OF AC COUNTS. WHICH ALSO HAD DULY SURRENDERED AND TAX ALREADY PAI D ON THE SAME. PLEASE FIND ENCLOSED THE FOLLOWING DOCUMENTS IN SUPPORT OF OUR SUBMISSIONS, WHICH ARE ALREADY GIVEN DURING THE ASSESSMENT PROCEEDINGS AND ARE ON RECORD :- (I) DETAIL ENCLOSED WITH REPLY DT 12.09.2013. (II) DIAMOND PURCHASE LEDGER. (III) DIAMOND SALE LEDGER. (IV) DIAMOND TRADING A/C. (V) DIAMOND STOCK REGISTER. (VI) VALUATION REPORT DT 14.03.2012. 15. A PERUSAL OF THE ABOVE DETAILS ALONG WITH DOCUM ENTS ATTACHED WITH THE PAPER BOOK REVEALS THAT THE ASSESSEE HAS SUBMIT TED THE COMPLETE PARTICULARS OF PURCHASE / SALES, ITEM-WISE QUANTITA TIVE DETAILS, STOCK ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 11 REGISTER, TRADING ACCOUNT OF DIAMOND AND DATE WISE MOVEMENT OF DIAMOND. THE DETAILS NOTED ABOVE WERE ALSO SUBMITTE D DURING THE RE- ASSESSMENT PROCEEDINGS. FROM THE ABOVE, IT IS DULY PROVED THAT THE ENTIRE DETAILS WERE SUBMITTED BY THE ASSESSEE. THE ASSESSI NG OFFICER WITHOUT ANY VERIFICATION OF ANY OF THE DETAILS SUBMITTED BY THE ASSESSEE AND EVEN WITHOUT VERIFICATION FROM THE CONCERNED SELLER M/S NAZAR IMPEX PVT LTD. MADE THE ADDITIONS WITHOUT APPLICATION OF MIN D MERELY ON THE BASIS OF THE SOME INVESTIGATION REPORT FROM THE DIRECTOR GENERAL (INVESTIGATION),MUMBAI WHICH ON STAND-ALONE BASIS W ITHOUT CORROBORATION WITH ANY OF THE FACTS OF THE CASE OF THE ASSESSEE CANNOT BE MADE THE SOLE BASIS TO HOLD THAT THE ASSESSEE HA D MADE BOGUS PURCHASES. MOREOVER, THE LD. COUNSEL FOR THE ASSESS EE HAS DEMONSTRATED THAT IF THE ALLEGED BOGUS PURCHASES AND CORRESPONDI NG SALES ARE IGNORED OR EXCLUDED, THERE WILL BE A RESULTANT LOSS OF RS. 20,16,844/- AND UNDER THE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSES SEE HAD BOOKED BOGUS PURCHASES TO REDUCE THE PROFITS. MOREOVER, WHEN THE SALES HAVE BEEN ADMITTED AND THERE IS SUFFICIENT PROFIT SHOWN BY TH E ASSESSEE ON SUCH SALES AND EVEN WITHOUT ANY IOTA OF EVIDENCE ON THE FILE THAT THE ASSESSEE WAS INDULGED IN BOGUS PURCHASES, THE LOWER AUTHORIT IES WERE NOT JUSTIFIED IN MAKING / CONFIRMING THE IMPUGNED ADDIT IONS. MOREOVER, NO DEFECT HAS BEEN POINTED OUT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND EVEN THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER. ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 12 IN VIEW OF THIS, GROUNDS NOS. 2 & 3 ARE ALLOWED IN FAVOUR OF THE ASSESSEE. 16. GROUND NO.4: AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE H AS SUBMITTED THAT HE DOES NOT PRESS GROUND NO.4 OF THE APPEAL, HENCE, IS SAME IS DISMISSED AS NOT PRESSED. 17. IN VIEW OF OUR FINDINGS GIVEN ABOVE ON GROUND N O.1, RE-ASSESSMENT IS QUASHED AND, THEREFORE, THE CONSEQUENTIAL ADDITI ONS MADE BY THE ASSESSING OFFICER HAVE NO LEGS TO STAND AND THE SAM E ARE ALSO ACCORDINGLY ORDERED TO BE DELETED. EVEN ON MERITS, IN VIEW OF OUR FINDINGS GIVEN ABOVE, THE ADDITIONS MADE BY THE ASS ESSING OFFICER ARE NOT SUSTAINABLE. 18. NOW COMING TO THE ASSESSEES APPEALS FOR ASSESS MENT YEARS 2009- 10 TO 2011-12, WHEREIN, THE ASSESSEE HAS TAKEN FOLL OWING GROUNDS OF APPEAL:- ITA NO. 398/CHD/2019 (A.Y. 2009-10):- 1. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE RE- ASSESSMENT IS LIABLE TO BE QUASHED ON THE GROUND THAT THE STATUTORY NOTICE U/S 143(2) WAS NOT SERVED ON THE ASSESSEE. 2. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE ADDITION HAS BEEN MADE BY THE AO WITHOUT REJECTING THE ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 13 BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961. 3. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN CONFIRMING THE ADDITION OF RS. 116610/- ON ACCOUNT OF BOGUS PURCHASES FOR RS. 1943495/- AND FURTHER ENHANCING THE ADDITION TO RS. 1943495/-, WHICH IS AGAINST THE LAW AND FACTS. 4. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN DISMISSING THE PLEA OF THE ASSESSEE FOR QUASHING THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. ITA NO. 399/CHD/2019 (A.Y. 2010-11):- 1. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE RE- ASSESSMENT IS LIABLE TO BE QUASHED ON THE GROUND THAT THE STATUTORY NOTICE U/S 143(2) WAS NOT SERVED ON THE ASSESSEE. 2. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE ADDITION HAS BEEN MADE BY THE AO WITHOUT REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961. 3. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN CONFIRMING THE ADDITION OF RS. 420392/- ON ACCOUNT OF G.P. ON SO CALLED BOGUS PURCHASES FOR RS. 7006529/- AND FURTHER ENHANCING THE ADDITION TO RS. 7006529/-, WHICH IS AGAINST THE LAW AND FACTS. 4. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN DISMISSING THE PLEA OF THE ASSESSEE FOR QUASHING ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 14 THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. ITA NO. 400/CHD/2019 (A.Y. 2011-12):- 1. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE RE- ASSESSMENT IS LIABLE TO BE QUASHED ON THE GROUND THAT THE STATUTORY NOTICE U/S 143(2) WAS NOT SERVED ON THE ASSESSEE. 2. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL THAT THE ADDITION HAS BEEN MADE BY THE AO WITHOUT REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961. 3. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN CONFIRMING THE ADDITION OF RS. 55954/- ON ACCOUNT OF G.P. ON SO CALLED BOGUS PURCHASES FOR RS. 932568/- AND FURTHER ENHANCING THE ADDITION TO RS. 932568/-, WHICH IS AGAINST THE LAW AND FACTS. 4. THAT THE HON'BLE CIT (A)-5 HAS ERRED IN DISMISSING THE PLEA OF THE ASSESSEE FOR QUASHING THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 19. BOTH THE LD. REPRESENTATIVES OF THE PARTIES HAV E STATED THE SINCE THE IDENTICAL GROUNDS HAVE BEEN TAKEN IN ALL THE AP PEALS AND EVEN THE ITA NOS. 398 TO 401/CHD/2019- SHRI RADHEY SHAYAM JAIN DIAMOND JEWELLERS PVT LTD, LUDHIANA 15 FACTS AND ISSUES INVOLVED ARE IDENTICAL, HENCE, TH E FINDINGS GIVEN BY US ON EACH OF THE ISSUE IN ASSESSEES APPEAL FOR ASSES SMENT YEAR 2012-13 WILL APPLY MUTATIS-MUTANDIS IN THESE CASES ALSO. IN VIEW OF THE FINDINGS GIVEN ABOVE, THE RE-ASSESSM ENT FRAMED IN ALL THE CAPTIONED APPEALS STAND QUASHED AND ALL THE APPEALS OF THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.2020. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 28.2.2020 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR