P P Jewellers Pvt. Ltd., Delhi V. ACIT, Central Circle- 25, New Delhi

ITA 6332/DEL/2017

AI Insights

The case involves P P Jewellers Pvt. Ltd., which filed appeals against the orders of the Commissioner of Income Tax (Appeals) concerning the assessment years 2011-12 and 2013-14. The primary issues revolved around the reopening of assessments under section 147 of the Income-tax Act, 1961, and the subsequent additions made to the assessee's income based on alleged bogus purchases. The CIT(A) had restricted the addition to 25% of the total purchases, which the assessee contested, and the Revenue appealed against the partial relief granted to the assessee. The Tribunal noted deficiencies in the CIT(A)'s handling of the reopening issue and the lack of confrontation with the assessee regarding the evidence, leading to the decision to remand the case for a thorough re-examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124253 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: F
• Next Hearing Date: 04-12-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 11-10-2017
• Other Referred Cases: Sanjay Oil Cake Industries Vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Rule of consistency; Retraction; Set aside
• Section: 147; 133A; 153A; 143(1); 139(1); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [DELHI BENCH: “F” NEW DELHI ] BEFORE DR. B. R. R. KUMAR, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR US, JUDICIAL MEMBER I.T.A. No. 6332/DEL/2017 (A.Y 2011-12) P P Jewellers Pvt. Ltd., H-5, Netaji Subhash Place, Pitampura, Delhi – 110 034. PAN No. AAACP0874G Vs. ACIT, Central Circle : 25, New Delhi. AND I.T.A. No. 6529/DEL/2017 (A.Y 2011-12) ACIT, Central Circle : 25, New Delhi. Vs. P P Jewellers Pvt. Ltd., H-5, Netaji Subhash Place, Pitampura, Delhi – 110 034. PAN No. AAACP0874G AND I.T.A. No. 6931/DEL/2017 (A.Y 2013-14) P P Jewellers Pvt. Ltd., H-5, Netaji Subhash Place, Pitampura, Delhi – 110 034. PAN No. AAACP0874G (APPELLANTS) Vs. ACIT, Central Circle : 25, New Delhi. (RESPONDENTS) O R D E R PER YOGESH KUMAR US, JM 1. These three cross appeals are filed by the assessee and the Revenue for assessment years 2011-12 and 2013-14 against the common order of the ld. Commissioner of Income Tax (Appeals)-29, New Delhi, dated 14.08.2017. Appellant by: Shri R. R. Singla, C. A.; Respondent by: Shri K. K. Mishra, Sr. D. R.; Date of Hearing 17.03.2023 Date of Pronouncement 23.03.2022 2 ITA. Nos. 6332 & 6529/Del/2017 AND ITA. No. 6931/Del/2017 P P Jewellers Pvt. Ltd., Delhi. I.T.A. No. 6332/DEL/2017 (AY 2011-12):- 2. The assessee has raised the following substantive grounds of appeal:- “1. The Ld. CIT{A} has erred on facts and law in disposing of the appeal without adjudicating on the primary ground relating to reopening of the assessment under the provisions of section 147 of the Income-tax Act,1961.The various grounds raised before the Ld. CIT pertaining to this issue read as under: a. The Id. Assessing Office has erred in law and facts by recording the reasons only on the basis of information provided by the ADIT, without application of mind. b. The Id. Assessing Officer has erred in law and facts by recording the reasons without any information to him as the statement of Gautam B Jain does not contain the name of the company Manirattanam Exim Private Limited as his company. c. The Ld. Assessing Officer has erred in law and facts by rejecting the objections raised by the assessee despite the retraction statement of the declarant Gautam Bhanwarlal Jain already available in records for the AY 2014-15. d. The Id. Assessing Officer has erred in law and facts, while reopening the assessment, which has not yet completed and pending before the Hon'ble ITAT, Delhi. 2. The Ld. CIT(A) has failed to observe that addition has been made without confronting the assessee with evidence. if any, in possession of the AO; thus flouting the principles of natural justice and hence the assessment order was liable to be set aside. 3. The Ld. CIT(A) has erred on facts and in law by accepting the AO's finding that the seller Maniratnam Exim Private Limited was non existent 3 ITA. Nos. 6332 & 6529/Del/2017 AND ITA. No. 6931/Del/2017 P P Jewellers Pvt. Ltd., Delhi. solely on the ground that the said company did not respond to the notice." 4. The Id. CIT (A) has erred in law and facts by holding the purchases to be bogus without appreciating the facts that these the assessee had produced the bills of purchase from Sales tax registered dealer and had made the payment by account payee cheques. 5. The Id. CIT (A) has erred on facts and in law in by disposing of the appeal solely on the basis of judgement of Hon’ble Gujrat Hitgh Court in the case of Sanjay Oil Cake Industries Vs. CIT reported at (2009) 316 ITR 214 whereas the facts of the present case are different as Shri Bhanwar Lal Jain on whose testimony the assessment was reopened and additions were made, had already retracted his statement.” I.T.A. No. 6529/DEL/2017 (AY 2011-12):- 3. The Revenue has raised the following substantive grounds of appeal :- “1. That on the facts and the circumstances of the case, the Ld. CIT (Appeals) has erred in law in restricting the bogus purchases to 25% of the total purchases, while ignoring the fact that all purchases were bogus purchases from other parties & Shri Banwari Lal Jain has admitted on oath in statement u/s 132(4) that the entity is engaged in giving accommodation entries in the name of various concerns including M/s. Manirattanam Exim Pvt. Ltd. 2. That on the facts and the circumstances of the case, the Ld. CIT (Appeals) has erred in law in restricting the bogus purchases to 25% of the total purchases, while ignoring the findings of the investigation wing that all purchases were mere accommodation entries taken by the assessee. 3. That the grounds of appeal are without prejudice to each other.” 4 ITA. Nos. 6332 & 6529/Del/2017 AND ITA. No. 6931/Del/2017 P P Jewellers Pvt. Ltd., Delhi. 4. Brief facts of the case are that the assessee company filed its return of income u/s 139(1) of the Income Tax Act, 1961 declaring total income of Rs. 5,79,86,950/- on 30.09.2021. The same has been processed u/s 143(1) of the Act. Later on a survey u/s 133A of the Act was conducted in the business premises of Assessee Company. Consequently, the assessment was completed u/s 153A read with Section 153C of the Act at income of Rs. 6,08,26,490/- on 16.06.2014. The department gathered certain information, accordingly the case of the assessee was reopened after recording the reasons and the notice u/s 148 of the Act was issued. The assessment u/s 147 read with Section 143(3) came to be passed on 31.12.2016 finding that the purchase of Rs. 3,78,08,000/- shown to have been made by the assessee from Manirattnam Exim Pvt. Ltd remain unexplained and not genuine. 5. Aggrieved by the assessment order dated 31.12.2016, the assessee preferred an appeal before the ld CIT(A). The ld CIT(A) vide order dated 14.08.2017 restricted the said bogus purchase to 25% of the total purchase by partly allowing the appeal. As against sustaining 25% of a total purchase, the assessee has preferred the appeal in ITA No. 6332/Del/2017 as against the deletion of the partial addition, the revenue has preferred the appeal in ITA No. 6529/Del/2017. 6. We have heard the parties and perused the material on record. As per ground No. 1, the assessee is aggrieved by the action of the ld CIT(A) in disposing the appeal without adjudicating the primary ground relating to reopening of the assessment under the provision of section 147 of the Act. Further, the assessee has also urged the ground that the ld CIT(A) has failed to observed that the addition has been made without confronting the assessee with evidence if any, in possession of the AO. Thereby, the AO had violated the principle of natural justice. 7. We have gone through the order of the ld CIT(A). Though the ld CIT(A) has made detailed discussion about the issue of reopening of the assessment under the provision of section 147 but no finding has been given by the ld CIT(A) and proceeded to decide the appeal on merit. Further, we find that 5 ITA. Nos. 6332 & 6529/Del/2017 AND ITA. No. 6931/Del/2017 P P Jewellers Pvt. Ltd., Delhi. even while deciding the matter on merit the ld CIT(A) has not given appropriate reasoning for restricting the bogus purchase to 25% of the total purchase and not even given proper reasoning to delete rest of the additions. In our opinion the approach of the ld CIT(A) is erroneous. Therefore, with an intention to render the substantial justice, we deem it fit to remand the matter to the file of the ld CIT(A) for de-novo consideration. Accordingly, we direct the ld CIT(A) to decide all the issues raised by the assessee after providing opportunity of being heard. Thus, the ground Nos. 1 and 2 are partly allowed for statistical purposes. 8. In the result, ITA No. 6332/Del/2017 filed by the assessee and ITA No. 6529/Del/2017 filed by the Revenue are partly allowed for statistical purposes. Since we have remanded the matter to the file of the ld CIT(A), other grounds on merit remained un-adjudicated by us. I.T.A. No. 6931/DEL/2017 (AY 2013-14) :- 9. Now we come to the appeal of the assessee in ITA No. 6931/Del/2017 for Assessment Year 2013-14. 10. The assessee has raised the following substantive grounds of appeal:- “1. The Ld. CIT{A} has erred on facts and law in disposing of the appeal without adjudicating on the primary ground relating to reopening of the assessment under the provisions of section 147 of the Income-tax Act,1961. The various grounds raised before the Ld. CIT pertaining to this issue read as under: a. The Id. Assessing Office has erred in law and facts by recording the reasons only on the basis of information provided by the ADIT, without application of mind. b. The Id. Assessing Officer has erred in law and facts by treating the party Mihir Diamond (Prop. Shri Gautam Bhanwarlal Jain) as non existent during the year 2012-13 due to the reason of return of letter dated 10-11-2016 unserved to the said party though the statement of such party before ADIT is taken to be evidence against the assessee company. c. The Ld. Assessing Officer has erred in law and facts while taking the same person i.e. Gautam Bhanwarlal Jain to the existent for his own proprietorship concern. d. The Id. Assessing Officer has erred in law and facts by rejecting the objections raised by the assessee despite the 6 ITA. Nos. 6332 & 6529/Del/2017 AND ITA. No. 6931/Del/2017 P P Jewellers Pvt. Ltd., Delhi. retraction statement of the declarant Gautam Bhanwarlal Jain already available in records for the AY 2014-15. e. The Ld. Assessing Officer has erred in law and facts while reopening the assessment, which has not yet completed and pending before the Hon’ble ITAT, Delhi. 2. The Ld. CIT(A) has erred in law and on facts by not adjudicating the legal issue raised during the course of appeal against issue of notice u/s 148 of the Act prior to communication of the Sanction from the Add. Commissioner of Income Tax. 3. The Ld. CIT(A) has erred in law and on facts by not adjudicating the legal issue raised during the course of appeal against issue of notice u/s 148 on the basis of sanction granted by the Add. Commissioner of Income Tax granted u/s 151(1) of the Act. 4. The Ld. CIT(A) has failed to observe that addition has been made without confronting the assessee with evidence, if any, in possession of the AO, thus flouting the principles of natural justice and hence the assessment order was liable to be set aside. 5. The Ld. CIT(A) has erred in law and on facts by ignoring the detailed findings of the Ld. AO that the purchases from three parties namely Parshwanath Gems Priate Limited, Krishma Diamond Private Limited and Shri Ganesh Gems are genuine. The order passed by the ld. CIT (A) is cryptic, giving no reasons for disregarding the evidences collected and relied upon by the ld. AO. 6. The Id. CIT (A) has erred on facts and in law by taking that the seller Mihir Diamond (Proprietorship concern of the declarant Gautam Bhanwarlal Jain) was non existent solely on the ground that notice u/s 133(6) could not be served by the ld. AO. 7. The Id. CIT (A) has erred in law and facts by holding the purchases to be bogus without appreciating the facts that these the assessee had produced the bills of purchase from Sales tax registered dealers and had made the payment by account payee cheques. 8. The Id. CIT (A) has erred on facts and in law in by disposing of the appeal solely on the basis of judgement of Hon’ble Gujrat Hitgh Court in the case of Sanjay Oil Cake Industries Vs. CIT reported at (2009) 316 ITR 214 whereas the facts of the present case are different as Shri Bhanwar Lal Jain on whose testimony the assessment was reopened and additions were made, had already retracted his statement and further the detailed enquiries made by the Ld. AO confirming that the purchases made from three parties namely Parshwanath Gems Priate Limited, Krishma Diamond Private Limited and Shri Ganesh Gems were genuine.” 11. Even in the present appeal we find that the assessee has raised the similar grounds of not adjudicating the legal issue by the ld CIT(A)raised during the course of appeal against the issue of notice u/s 148 of the Act. In 7 ITA. Nos. 6332 & 6529/Del/2017 AND ITA. No. 6931/Del/2017 P P Jewellers Pvt. Ltd., Delhi. view of the above and considering the fact that the ld CIT(A) has not decided the matter even on merit by giving proper reason and by following the principle of consistency, we deem it fit to remand the matter to the file of the ld CIT(A) for de-novo verification after giving the opportunity of being heard to the assessee. 12. Ordered accordingly. 13. Since we have remanded the matter to the file of the ld CIT(A), other grounds on merit remained un-adjudicated by us. 14. In the result, the appeal of the assessee in ITA No. 6931/Del/2017 is partly allowed for statistical purposes. Order pronounced in the Open Court on : 23.03.2023. -Sd/- -Sd/- (B. R. R. KUMAR) (YOGESH KUMAR US) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated :23/03/2023 *MEHTA/AK Keot* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI