Addl.CIT, special Range-18, New Delhi V. Jagananth Hemchand Jain, New Delhi

ITA 7754/DEL/2018

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8452 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-02-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FALSIFICATION OF BOOKS
• Keywords: Bogus purchase; Capital asset converted into stock in trade; Business income; Principle of natural justice; Cost of acquisition; Wrong claim; Accommodation entries; Retraction; Set aside
• Section: 147; 69; 145; 6; 10; 2; 69C; 11; 133(6); 250; 48; 13; 145(3); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER Sl. No ITA/CO No(s) Assessment Year(s) Appeal(s) by Appellant vs. Respondent Appellant Respondent 1. ITA No.7754/Del/2018 2010-11 ACIT Special Range-18, New Delhi Jagan Nath Hem Chand Jain Shop No.7, Sunder Nagar Market, New Delhi-110 003 2. CO No.15/Del/2023 (in ITA No.7754/Del/2018) -do- Jagan Nath Hem Chand Jain ACIT Special Range-18, New Delhi 3. ITA No.7755/Del/2018 2011-12 ACIT Special Range-18, New Delhi Jagan Nath Hem Chand Jain Shop No.7, Sunder Nagar Market, New Delhi-110 003 4. CO No.16/Del/2023 (in ITA No.7755/Del/2018) -do- Jagan Nath Hem Chand Jain Shop No.7, Sunder Nagar Market, New Delhi-110 003 ACIT Special Range-18, New Delhi Assessee by Shri M. P. Rastogi, Adv. Shri Deepk Malik, Adv. Revenue by Shri Sandip Kumar Mishra, Sr. D.R. Date of hearing: 14.02.2024 Date of Pronouncement: 29.02.2024 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T h e c a pt i o ne d a pp e a ls i n t h e i n s t a n t c a s e h a ve b e e n d i re c t e d b y t he R e ve n ue a ga in s t t h e re s p e c t i ve f i rs t a p p e ll a t e o rd er s f o r A s s e s s m e nt Y e a r s 2 0 1 0 -1 1 a n d 2 01 1 - 1 2 . T he a s s e s s e e h a s a l s o f ile d C r os s O bj e c t i o n i n t he r e s p e c ti ve a p pe a l s of t h e R e ve nu e . T h e c a p tio ne d a p pe a l s a re I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 2 t a bu l a t e d h e re u nd e r: Sr. Nos ITA/CO Nos. CIT(A) Order dated Assessment Order dated Remarks 1. ITA No.7754/Del/2018 CIT(A)-18, New Delhi order dated 28.09.2018 AO Order dated 31.12.2017 Assessment order under Section 143(3)/147 of the I.T. Act, 1961 2. CO No.15/Del/2023 (in ITA No.7754/Del/2018) -do- -NA- -NA- 3. ITA No.7755/Del/2018 -do- AO Order dated 31.12.2017 Assessment order under Section 143(3)/147 of the I.T. Act, 1961 4. CO No.16/Del/2023 (in ITA No.7755/Del/2018) -do- -NA- -NA- I T A N o . 7 75 5/ D e l/ 2 0 1 8 & C O N o . 16 / D e l / 20 2 3 - ( A . Y . 2 01 1 - 1 2) 2. W e s h a l l f ir s t re f e r t o a p pe a l of t h e R e ve n u e i n I T A N o . 77 5 5/ D e l / 2 01 8 r e l e va n t t o A s s e s s m e n t Y e a r 2 0 1 1 - 12 a s a dve rt e d i n t he c o u r s e o f h e a ri n g. T h e C r o s s O b j e c ti o n th e r e o n i n C O N o . 16 / D e l / 20 2 3 f i l e d b y a s s e s s e e s e e k in g t o r a i s e jur i s d ic t i o na l i nf i rm i t i e s i n t h e a c ti o n of A s s e s s i n g O f f i c e r s ha ll a l s o b e a d ve r t e d s i m u lt a n e o u s l y . 3. T h e gr o u n ds ra i s e d b y t h e R e ve n u e re a d a s u n d e r: “ O n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e : 3 . T h e C I T ( A ) h a s e r r e d i n r e s t r i c t i n g t h e a d d i t i o n t o t h e e x t e n t a d d i t i o n a l g r o s s p r o f i t a t 5 % o f a d d i t i o n m a d e u / s 6 9 C o n a c c o u n t o f b o g u s a c c o m m o d a t i o n p u r c h a s e b i l l s f r o m M / s K r i y a Im p e x P v t . L t d . a t R s . 6 9 ,2 0 , 1 5 2 / - t h e r e b y a l l o w i n g r e l i e f o f R s . 6 1 ,9 4 ,1 4 4 / - w h e n t h e p u r c h a s e f r o m s u c h p a r t y w a s a c k n o w l e d g e d t o b e a n a c c o m m o d a t i o n e n t r y . 4 . T h e C I T (A ) e r r e d i n d e l e t i n g a d d i t i o n o f R s . 1 , 4 5, 3 2 ,1 3 8 / - w h i c h w a s m a d e t o t h e n e t p ro f i t b y r e j e c t i n g t h e b o o k s o f a cc o u n t s u / s 1 4 5 ( 3 ) a s t h e t r a n s a c t i o n r e c o rd e d i n t h e b o o k s a r e p a r t l y a c c o m mo d a t i o n e n t r y w h i c h c h a l l e n g e d t h e r e l i a b i l i t y o f t h e e n t r i e s / t r a n s a c ti o n s r e c o r d e d i n t h e b o o k s o f a c c o u n t s l e a d i n g A O t o e s t i m a t e t h e t o t a l t u rn o v e r a t R s . 1 4 .5 0 c r o r e a s a g a i n s t d e c l a r e d t u r n o v e r o f R s . 1 3 . 3 4 c r or e a n d p r o f i t a t R s . 3 , 0 3 ,0 5 , 0 0 0 / - a s a g a i n s t R s . 9 2 , 5 2 , 7 1 0 / - d e c l a r e d by t h e a s s e s se e a n d a d d i t i o n o f R s . 6 5 ,2 0 , 1 5 2 / - m a d e u / s 6 9 C o f I . T . A ct , 1 9 6 1 a t p o i n t 1 . ” 4. A s p e r i t s C ro s s O b j e c t i o ns , t h e a s s e s s e e ha s c ha ll e n ge d t he j ur i s d i c t i o n a s s u m e d b y t he A s s e s s i n g O f f i c e r u nd e r Se c t i o n 1 4 7 r . w . I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 3 Se c t i on 14 8 o f t h e A c t . T h e g ro u nd s o f th e C r os s O bj e c t io ns r e a d a s un d e r: “ 1 . T h a t t h e r e i s n o v a l i d a s su m p t i o n o f j u r i s d i c t io n s u / s . 1 4 7 / 1 4 8 o f t h e I n c o m e T a x A c t b y t h e a s s e s s i n g o f f i c e r a n d c o n s e q ue n t l y t h e R e a s s e s s m e n t o r d e r p a s s e d i s i n v a l i d a n d b a d i n l a w. 2 . T h a t t h e r e w a s n o v a l i d m a t e r i a l a v a i l a b l e w i t h t h e a s s e s s i n g o f f i c e r a n d a c c o r d i n g l y t h e R e a s o n t o b e l i e v e a s m a d e b y t he A O i s b a s e d o n s u sp i c i o n a n d t h e r e f o r e t h e R e - a s s e s s m e n t o r d e r , as p a ss e d i n f u r t h e r a n c e t h e r e o f i s a r b i t r a r y , u n j u s t a n d b a d i n l a w . 3 . T h a t t h e a l l e g e d re a s o n t o b e l i e v e , a s m a d e b y th e A O i s w i t h o u t a p p l i c a t i o n o f m i n d a n d a r e i n t h e n a t u r e o f s u s p i ci o n a n d a l s o b a s e d o n b o r r o w e d s a t i s f a c t i o n a n d a c c o r d i n g l y t h e R e - a s s e s sm e n t s o f r a m e d in f u r t h e r a n c e t h e r e o f i s a r b i t r a r y a n d b a d i n l a w . 4 . T h a t w i t h o u t p r e j u d i c e t o g r o u n d s a b o v e , t h e a l le g e d p u r c h a s e s f r o m M / s K r i y a I m p e x a r e o n l y R s 2 5 ,1 2 , 5 9 0 / - h e n c e t h e ad o p t i o n o f f i g u r e o f a l l e g e d b o g u s p u r c h a s e i n t h e r e a so n t o b e l i e v e a s w e l l a s i n t h e a s s e s s m e n t o rd e r i s a r b i t r a r y , u n j u s t a n d a t a n y r at e v e r y e x c e s s i v e . 5 . T h a t t h e a s s e s s i n g o f f i c e r a n d C I T ( A ) o u g h t n o t t o h a v e m a d e a n y a d d i t i o n o n a c c o u n t o f s u c h a l l e g e d b o g u s p u r c h a s e w h e n t h e r e i s n o d i s p u t e a b o u t s a l e a n d a t a n y ra t e t h e a d d i t i o n s u st a i n e d b y C IT ( A ) i s v e r y e x c e s s i v e . ” 5. T o a dd r e s s t h e va l i di t y o f j u ri s d i c t i o n un d e r Sec t i o n 1 48 r . w . Se c t i on 14 7 r a i s e d in C ro s s O b j e c t i on s , t he r e a s o ns r e c or de d b y A s s e s s i n g O f f i c e r un d e r Se c t io n 1 4 8 ( 2) o f t he A c t ar e r e p r o d u c e d he r e un d e r f o r r e a d y r e f e re n c e : R e a s o n s t o b e l i e v e r e c o r d e d f o r i s s u e o f n o t i c e u / s. 1 4 8 o f t h e I n c o m e T a x A c t , 1 9 6 1 N a m e & A d d r e s s o f t h e M / s . J a g a n N a t h H e m c h a n d A s s e s s e e 7 , S u n d e r N a g a r M a r k e t , N e w D e l h i 1 1 00 0 3 P A N A A G F B 5 8 3 3 Q S t a t u s F i r m A s s e s s m e n t Y e a r 2 0 1 1 - 1 2 T h e a s s e s s e e M / s J a g a n N a t h H e m c h a n d f i l e d r e t u r n of i n c o m e f o r t h e A Y 2 0 1 1 - 1 2 o n 2 9 . 0 9 . 2 0 1 1 d e c l a r i n g t o t a l i n c o m e o f R s . 9 3 ,6 1 , 1 9 0 / - f o r t h e y e a r u n d e r c o n s i d e r a t i o n . T h e s a i d r e t u r n o f i n c o m e f i l e d b y a s s e s se e w a s n o t s e l e c t e d f o r s c r u t i n y a s s e s sm e n t . 2 . S e a r c h & s e i z u r e o p e r a t i o n u / s . 1 3 2 o f t h e I . T . A c t w a s c o n d u c t e d o n 0 3 -1 0 - 2 0 1 3 o n R a j e n d r a J a i n G r o u p , S a n ja y C h o u d a r y G r o u p & D h a r m i c h a n d J a i n , G r o u p b y t h e D D I T ( I n v ) , U n i t 1 ( 3 ), M u m b a i . T h e R a j e n d ra J a i n G r o u p , S a n j a y C h o u d a r y G r o u p & D h a r m ic h a n d J a i n I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 4 G r o u p , w e r e K n o w n e n t r y o p e ra t o r s o f M u m b a i i n d u l g in g i n p r o v i d in g a c c o m m o d a t i o n e n t r i e s i n t h e n a t u r e o f b o g u s s a l e s a n d u n s e c u r e d l o a n s , 2 . 1 D u r i n g t h e c o u r s e o f s e a r c h o p e r a t i o n , s t a t e m e nt s o f v a r i o u s p e r so n s w e r e r e c o r d e d i n c l u d i n g S h . R a j e n d ra J a i n , S a n j a y Ch o u d h a r y & D h a r m i c h a n d J a i n . I n t h e s t a t e m e n t r e c o r d e d , i t w a s a d m i t t e d b y t h e m t h a t t h e y w e r e p r o v i d i n g a c c o m m o d a t i o n e n t r i e s t h r ou g h s e v e r a l c o m p a n i e s / c o n c e rn s i n t h e g a rb o f S a l e s / u n s e c u r e d l o a n to v a r i o u s p a r t i e s . T h e y a l s o a d m i t t e d t h a t t h e y w e r e n o t d o i ng a n y r e a l b u s i n e s s a n d o n l y p r o v i d i n g a c c o m m o d a t i o n e n t r i e s . T h e y f u r th e r a d m i t t e d t h a t n o p h y s i c a l g o o d s w e r e h a n d e d o v e r b y t h e m t o t h e p a r ti e s t o w h i c h s a l e s h a d b e e n s h o w n i n t h e i r b o o k s o f a c c o u n t s . A l i s t of c o m p a n i e s / c o n c e r n s b e l o n g i n g t o t h e s e e n t r y o p e ra t o r s t h r o u g h w h i c h b og u s e n t r i e s g i v e n t o v a r i o u s b e n e f i c i a r i e s h a s b e e n f o r w a r d e d t o t h e o f fi c e o f P r . C I T , D e l h i - 1 8 , N e w D e l h i b y D y . C I T , C e n t r a l C i r c l e - 4 , S u r a t v id e l e t t e r F . N o . S R T / D C I T / C C - 4 / R a j e n d ra J a i n , D h a rm i c h a n d J a i n , S a n ja y C h o u d h a r y G r . / 2 0 1 5 -1 6 d a t e d 3 0 / 1 1 / 2 0 1 5 . T h e sa i d i n f o r m a t i o n w a s f o r w a r d e d b y t h e o f f i c e o f t h e P r . C I T - 1 8 , N e w D e l h i t o t h e J o i nt C I T , R a n g e -5 2 , N e w D e l h i v i d e l e t t e r F . N o . P r . C I T - 1 8 / R a j e n d ra J a i n , D h a r m i c h a n d J a i n , S a n j a y C h o u d h a r y G r . / 2 0 1 5 - 1 6 / 1 2 5 2 d a t e d 2 8 / 1 2 / 2 0 1 5 . T h e J o i n t C I T , R a n g e - 5 2 , N e w D e l h i f u r t h e r f o r w a rd e d s a i d i n f o r m a ti o n t o a l l c o n c e r n e d c h a r g e d i n c l u d i n g W a r d 5 2 ( 3 ) , D e l h i . L i s t s o f a l l su c h b e n e f i c i a r i e s w h o h a d o b t a i n e d b o g u s a c c o m m o d a t i o n e n t r i e s f r o m t h e s e c o n c e rn s h a v e a l so b e e n r e c e i v e d b y t h i s o f f i c e . T h e n a m e o f t h e a s s e ss e e i s a l s o m e n t i o n e d i n t h e l i s t o f b e n e f i c i a r i e s w h o h a v e o b t a i n e d b o g us a c c o n m o d a t i o n e n t r i e s f r o m t h e s e c o n c e r n s . T h e d e t a i l s o f e n t r i e s o b t a i n e d b y t h e a s s e s s e e d u r i n g F . Y . 2 0 1 0 - 1 1 r e l e v a n t t o A Y 2 0 1 1 -1 2 a r e a s u n d e r . P A N o f b i l l p r o v i d e r N a m e o f b i l l p r o v i d e r A . Y . N a t u r e o f t r a n s a c t i o n P a n o f b e n e f i c i a r y N a m e o f b e n e f i c i a r y T o t a l V a l u e o f t r a n s a c t i o n R e a l v a l u e o f t r a n s a c t i o n A A D C K 1 9 2 6 B K R I Y A 2 0 1 1 - 1 2 S A L E A A A F J 5 2 6 3 A J A G A N N A T H H E M C H A N D 2 5 1 2 5 9 0 6 5 2 0 1 5 2 T o t a l 2 5 1 2 5 9 0 6 5 2 0 1 5 2 S h R a j i n d r a J a i n a n d S h . S u r e n d r a J a i n i n t h e s t a t em e n t r e c o rd e d b e f o r e t h e D D I T (I n v . ) , M u m b a i a d m i t t e d t h a t a l l t h e c o n c ern c o n t r o l l e d a n d m a n a g e d b y t h e m w e r e n o t d o i n g a n y r e a l t r a d i n g i n D i a m o n d b u t i n d u l g e d i n p a p e r t r a n sa c t i o n s o n l y , s h . R a j e n d r a Ja i n p r o v i d e d d e t a i l s o f p ro p r i e t o r d i r e c t o r / p a r t n e r w h o w e r e c o n t r o l l i n g t h e c o n c e r n s f r o m w h i c h a c c o m m o d a t i o n e n t r i e s w e r e p r o v i d e d . H e s t a t ed t h a t i n K r i y a I m p e x P v t . L t d . A n d M a n i s h S J a i n w a s d i r e c t o r w h o i s n a m e s a k e d i r e c t o r a n d t h e c o n c e r n w a s c o n t r o l l e d a n d m a n a g e d b y S h R a j e n d ra J a i n . T h e r e l e v a n t p o r t i o n o f t h e s t a t e m e n t o f sh Ra j i n d e r J a i n i s r e p r o d u c e d f o r r e f e r e n c e . “ Q . 1 2 . I t h a s c o m e t o t h e n o t i c e t h a t y o u r e m p l o y e es a r e a l s o r u n n in g t h e i r i n d e p e n d e n t p ro p r i e t o r s h i p c o n c e r n s o f h e r o wn . D o y o u k n o w ? I f I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 5 y e s , P l e a s e e x p l a i n a s t o h o w t h e y d o j u s t i c e w i t h t h e r o l e s a n d r e s p o n s i b i l i t i e s a s s i g n e d t o t h e m b y y o u ? A n s : S i r , i n f a c t t h e p r o p r i e t o r y c o n c e r n s i n t h e na m e s o f o u r e m p l o y e e s a r e n o t i n d e p e n d e n t b u s i n e s s a c t i v i t y o f t h e i r o w n . W h e n I w a s w o r k i n g f o r S h r i R a t a n t a l J a i n , b e s i d e s o t h e r c o n c e r n s , h e h a d b e e n a l s o o p e r a t i n g t h ro u g h M / s M i n a r G e m s , a p ro p r i e t o r c o n ce r n i n m y n a m e . S o , a f t e r q u i t t i n g t h e j o b , I t o o k t h e i d e a o f o p e r a t i ng t h r o u g h v a r i o u s c o n c e r n s i n c l u d i n g s e v e r a l p ro p r i e t o r s h i p c o n c e r n s i n t h e n a m e s o f o u r e m p l o y e e s . I n s u c h a c a s e , t h e e f f e c t i v e c o n t r o l o f b u s i n e s s r e m a in s w i t h u s a n d t h e b u s i n e s s i n c o m e o f s u c h p ro p r ie t o r s h i p co n c e rn g e t a d j u s t e d a g a i n s t t h e o v e r a l l s a l a r y p a y a b l e t o s u c h e m p l o y e e o n a n n u a l b a s i s . Q : 1 3 P l e a s e f u r n i s h d e t a i l s o f a l l t h e b u s i n e s s c o nc e rn s w h i c h a r e d i r e c t l y o r i n d i r e c t l y c o n t r o l l e d b y y o u a l o n g w i t h S h r i S u r e n d r a J a i n . A n s . S i r , w e a r e o p e r a t i n g t h ro u g h a n o . o f b u s i n e ss c o n c e r n s o f a l l t h e t h r e e n a t u r e i . e . p r o p r i e t o r s h i p f i r m , p a r t n e r s h i p f i r m a s w e l l a s c o m p a n i e s i n t h e n a m e o f v a r i o u s p e r s o n s i n c l u d i n g o u r e m p l o y e e s . B u t f o r a l l p r a c t i c a l p u r p o s e s , m y s e l f a n d S h . S u r e n d r a J a i n a r e h a n d l i n g t h e e n t i r e b u s i n e s s n e t w o rk o n p r o f i t s h a r i n g b a s i s . Q . 1 4 D u r i n g t h e s u r v e y a c t i o n u n d e r t a k e n a t v a r i o u s o f f i c e p r e m i s e s o f y o u r s n o t a s i n g l e p i e c e o f d i a m o n d h a s b e e n f o u n d b y r e s p e c t i v e , s u r v e y t e a m s t h o u g h t h e r e i s s u b s t a n t i a l t u r n o v e r s h o w n b y v a r i o u s c o n c e r n s c o n t r o l l e d b y y o u . P l e a s e s t a t e a s t o w h e re d o y o u k e e p h o u r s t o c k i n t r a d e . A n s . S i r , i n t h i s r e g a rd , I w a n t t o a d m i t t h a t w e ar e e n g a g e d i n b u s i n e s s o f b i l l s h o p p i n g t h r o u g h a l l t h e c o n c e r n s d u e t o w hi c h w e d o n o t h a v e a n y p h y s i c a l s t o c k o f d i a m o n d w i t h u s a t a n y o f o u r p l a c e a t a n y p o i n t o f t i m e . I w o u l d l i k e t o f u r t h e r a d d t h a t w e a r e m e r e ly l e n d i n g n a m e s o f o u r v a r i o u s c o n c e r n s t o t h e r e a l i m p o r t e r o f d i a m o n d s wh o t a k e s t h e a c t u a l d e l i v e r o f d i a m o n d s . ” 4 . I h a v e i n d e p e n d e n t l y e x a m i n e d t h e s t a t e m e n t o f oa t h b y s h . R a j i n d e r J a in , t h e m a n a g i n g p e r s o n o f t h e a l l e g e d se l l e r p a r t y l e . K r i y a I m p e x P v t . L t d . a n d a f t e r d u l y c o n s i d e r i n g t h e s a m e, t h e r e l e v a n t f a c t s i n c l u d i n g m o d u s o p e r a n d i a n d c o n c l u s i o n s a r r i v e d a t a r e b e i n g s u m m a r i z e d a s u n d e r . ( i ) N o t a s i n g l e p i e c e o f d i a m o n d w a s f o u n d a t a n y o f t h e p re m i s e s c o v e r e d u n d e r s e a r c h a n d s e i z u r e a c t i o n w h i c h a l s o i n c l u d e d t h e p r e m i s e s f r o m w h e r e K r i y a I m p e x P v t . L t d w a s o p e ra te d . T h e c o n c e rn w a s m e r e l y d o i n g p a p e r t r a n s a c t i o n s i n s t e a d o f c a r ry i n g o u t a n y r e a l b u s i n e s s o f d i a m o n d s t r a d i n g . ( i i ) T h e c o n c e rn a n d o t h e r a s so c i a t e d c o n c e rn s a c t ua l l y w e r e d o i n g b u s i n e s s o f m a i n t a i n i n g b o o k s o f a c c o u n t s o n l y a n d w e r e n o t d o i n g a n y a c t u a l t r a d i n g o f p h y si c a l c o m m o d i t y i . e , d i a m o n d s , ( i i i ) T h e a c t u a l i m p o r t e r s o f r o u g h d i a m o n d s a p p r o ac h e d t h e s e c o n c e r n s t o i m p o r t t h e i r d i a m o n d t h r o u g h t h e i r g r o u p c o m p a n ie s / c o n c e rn s a n d o n r e c e i p t o f t h e c o n s i g n m e n t , t h e r e a l i m p o r t e r g e t s t h e d e l i v e r y o f d i a m o n d I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 6 a f t e r c l e a r a n c e f o r m C H A . ( i v ) T h e b o o k s t o c k s o f r o u g h d i a m o n d s h a v e b e e n c on v e r t e d b y t h e s e c o n c e r n s t o c u t a n d p o l i s h e d d i a m o n d s t h r o u g h t h e i r c o m m i s s i o n c o m p a n i e s o r s o m e t i m e s t h e s e n a m e l e n d i n g c o n c e r n s i s s u e b i l l s o f r o u g h d i a m o n d s t o l o c a l p u r c h a s e r s a n d sh o w p u r c h a s e o f po l i s h d i a m o n d s f r o m t h e m t o s q u a r e u p t h e t r a n sa c t i o n . ( v ) O n r e c e i p t o f s u c h c u t a n d p o l i s h e d d i a m o n d s , th e y i s s u e sa l e b i l l s t o v a r i o u s p a r t i e s a t t h e r e q u e s t o f t h e a c t ua l i m p o r t e r s . T h e a c t u a l i m p o r t e r a r r a n g e s t h e s a l e p ro c e e d s f r o m p a r t i e s t o w h o m s a l e b i l l s w e r e i s s u e d . O n c e t h e s a l e p r o c e e d s a r e r e c e i v e d , t h e s e n a m e l e n d i n g c o n c e r n s m a k e i m p o r t r e m i t t a n c e t o t h e r e q u e s t o f i m p o r t e r . ( v i ) A s r e g a r d s t h e lo a n s a n d a d v a n c e s , t h e s e n a m e l e n d i n g c o n c e r n s i m p o r t g o o d s o n c r e d i t b a s i s f o r l o n g e r p e r i o d a n d s a l e t h e g o o d s o n i m m e d i a t e p a y m e n t b a s i s . T h e r e f o r e , t h e y r e c e i v e c he q u e i m m e d i a t e l y a n d u s e t h e s a m e f o r g i v i n g l o a n s . T h e s e n a m e l e n d in g p a r t i e s r e c e i v e s c a sh f r o m l o a n p a r t i e s a g a i n s t t h e c h e q u e g i v e n t o t h e m . T h e c a s h i s u s e d t o s e t t l e t h e a c c o u n t s t o w h o m t h e y h a v e s o l d t h e go o d s t h ro u g h a n g a d i a . I n t h i s p ro c e s s t h e s e n a m e l e n d i n g c o n c e r n s r e c e i v e i n t e r e s t o n s u c h l o a n w h i c h t h e y r e t u rn b a c k i n c a s h a f t e r d e d u c t i n g t h e ir c o m m i s s i o n . 4 . 1 F u r t h e r o n a n a l y s i s o f t h e d a t a p r o v i d e d b y t h e I n v e s t i g a t i o n W i n g a s s e s s e e f i r m M / s . J a g a n N a t h H e m c h a n d w a s f o un d t o b e e n l i s t e d i n t h e n a m e o f t h e b e n e f i c i a r i e s o f a c c o m m o d a t i o n en t r y f r o m K r i y a I m p e x P v t L t d . a n d t h e v a l u e o f t r a n sa c t i o n s w a s R s. 6 5 , 2 0 ,4 5 2 / - , w h i c h i s m a n a g e d b y S h . Ra j e n d r a J a i n a n d a s b ro u g h t o u t a b ov e h e w a s f o u n d to b e a n e n t r y p r o v i d e r i n d u l g e d i n p r o v i d i n g a c c o m m od a t i o n e n t r i e s t h e n a t u r e o f B o g u s s a l e s / p u r c h a s e s . S h . R a j e n d r a J a i n h a s h i m s e l f c o n f e s s e d o n o a t h t h a t h e i s n o t d o i n g a n y r e a l t r a d i n g b u t in d u l g e d i n p a p e r t r a n s a c t i o n o n l y a n d h e p r o v i d e s a c c o m m o d a t i o n e n t ri e s b y i s s u i n g , a c c o m m o d a t i o n b i l l w i t h o u t a f f e c t i n g a n y r e a l t r a d in g t o t h e a s s e s s e d w i t h m o d u s o p e r a n d i a s d i s c u s s e d a b o v e . T h i s t h e r e fo r e i s a s h a m t r a n s a c t i o n i n t h e n a t u r e o f a c c o m m o d a t i o n e n t r i e s a n d i t i s e v i d e n t t h a t t h e a s s e s s e e h a d r e d u c e d i t s i n c o m e b y o b t a i n i n g b og u s p u r c h a s e b i l l f r o m t h e a b o v e p a r t y . I n v i e w o f t h e s e f a c t s , t h e in e v i t a b l e c o n c l u s i o n i s t h a t a n i n c o m e o f R s . 6 5 , 2 0 ,1 5 2 / - h a s e s c a p e d a s s e s sm e n t i n t h e c a s e o f t h e a s s e s s e e f o r A . Y . 2 0 1 1 - 1 2 b y r e a s o n o f t h e f a i lu r e o n t h e p a r t o f t h e a s s e s s e e t o d i s c l o s e f u l l y a n d t r u l y a l l m a t e r i a l fa c t s n e c e s s a r y f o r i t s a s s e s s m e n t . 4 . 2 F u r t h e r , i t i s p e r t i n e n t t o m e n t i o n t h a t f r e s h i n f o r m a t i o n e v i d e n c i n g t h a t t h e s e p u r c h a s e s f r o m t h e a b o v e p a r t y i s b o g u s p u r c h a s e j u s t t o c l a im h i g h e r e x p e n d i t u r e a n d t o r e d u c e p r o f i t h a s a p p e a r ed su b s e q u e n t l y w h i c h w a s n o t a v a i l a b l e a t t h e t i m e o f o r i g i n a l a s s e s s m e nt p r o c e e d i n g s . T h e s e f a c t s h a v e e m e r g e d o n l y a s a r e su l t o f a c t i o n b y t he R e v e n u e . C l e a r l y , i n t h i s c a s e t h e r e w a s f a i l u r e o n t h e p a r t o f t h e a s s es s e e t o d i s c l o s e f u l l y a n d t r u l y a l l m a t e r i a l f a c t s f o r h i s a s s e s s m e n t . 4 . 3 A f t e r c o n s i d e r i n g a n d e x a m i n i n g t h e f a c t s o f t he c a s e i n d e p e n d e n t l y a n d d u e a p p l i c a t i o n o f m i n d , I h a v e r e a s o n s t o b e l ie v e t h a t a n i n c o m e o f m o r e t h a n R s . 1 ,0 0 , 0 0 0 / - i n t h e c a s e o f t h e a s s e s s ee t h a t w a s c h a r g e a b l e t o t a x u n d e r t h e p r o v i s i o n s o f I n c o m e T a x A c t , 1 9 6 1 h a s e s c a p e d I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 7 a s s e s s m e n t d u r i n g t h e A . Y . 2 0 1 1 - 1 2 b y r e a s o n o f t h e f a i l u r e o n th e p a r t o f t h e a s s e s s e e t o d i s c l o s e f u l l y a n d t r u l y a l l m a te r i a l f a c t s n e c e s s a r y f o r i t s a s s e s s m e n t w h i c h h a s c o m e t o t h e n o t i c e s u b s e q ue n t l y . H e n c e , i t i s a f i t c a s e f o r I n i t i a t i o n o f p r o c e e d i n g s , i n t e r m s o f s e c t i o n 1 4 7 o f t h e I . T . A c t , 1 9 6 1 . 5 . F u r t h e r , i t i s p e r t i n e n t t o m e n t i o n w h a t H o n ’ b l e G u j a r a t H ig h C o u r t i n sp e c i a l c i v i l A p p l i c a t i o n N o .2 1 1 9 o f 2 0 1 6 i n t h e c a s e o f C h o k s i V a c h h a ra j M a k a n j i C o . V s . A C I T , w h e r e i n t h e p a p e r co n c e rn s i n v o l v e d w e r e s a m e a s i n t h e i n s t a n t c a s e , h a s h e l d t h a t : “ O n t h e b a s i s o f t h e i n f o r m a t i o n a v a i l a b l e a t t h e co m m a n d o f t h e A s s e s s i n g O f f i c e r , h e n o t e d t h a t R a j e n d r a J a i n a n d S u r e n d ra J a i n m e r e l y p ro v i d e d a c c o m m o d a t i o n e n t r i e s w i t h o u t a c t u a l s a l e o f d i a m o n d s . T h e a s s e s s e e h a d t h e r e b y c l a i m e d h i g h e r e x p e n d i t u r e a n d r e d u c e d t h e p r o f i t i t c a n n o t b e s t a t e d t h a t t h e A s s e s s i n g O f f i c e r d i d n o t h a v e t a n g ib l e m a t e r i a l s t o f o r m a b e l i e f t h a t t h e i n c o m e c h a r g e a bl e t o t a x h a d e s c a p e d a s s e s s m e n t . S u c h i n f o r m a t i o n w a s n o t a v a i l a b l e d u r in g t h e o r i g i n a l a s s e s s m e n t . O b v i o u s l y t h e a s s e s s e e w o u l d n o t m a k e su c h d i s c l o s u r e s . T h e r e q u i r e m e n t f o r r e o p e n i n g o f t h e a s s e s s m e n t e v e n b ey o n d a p e r i o d o f f o u r y e a r s a r e t h e r e f o r e s a t i s f i e d . M e r e l y b e c a u s e s u c h i n f o r m a t i o n w a s s u p p l i e d t o t h e A s s e s s i n g O f f i c e r b y t h e i n v e s t i g a ti o n w i n g o f t h e d e p a r t m e n t w o u l d n o t m e a n t h a t t h e A s s e s s i n g O f f i c er c a n n o t r e p l y u p o n i t a f t e r o f c o u r s e , p e r u s i n g t h e s a m e a n d f o r m h i s o w n o p i n i o n o n t h e b a s i s o f t h e s a m e . ” A l s o , i n t h e c a s e o f C I T v N o v a P r o m o t e r s & F i n l e a se ( P ) L t d ( I T A N o . 3 4 2 o f 2 0 1 1 ) d a t e d 1 5 . 0 2 .2 0 1 2 t h e H o n ’ b l e D e l h i H i gh C o u r t , w h i c h i s t h e j u r i s d i c t i o n a l H i g h C o u r t h e l d t h a t a s l o n g a s t h e r e i s a ‘ l i v e l i n k ’ b e t w e e n t h e m a t e r i a l w h i c h w a s p l a c e d b e f o r e t h e A ss e s s i n g O f f i c e r a t t h e t i m e w h e n r e a s o n s f o r r e o p e n i n g w e r e r e c o r d e d . p r o c e e d i n g s u / s . 1 4 7 w o u l d b e v a l i d . T h e C o u r t a l s o h e l d - “ W e a r e a w a r e o f t h e l e g a l p o s i t i o n t h a t a t t h e s t ag e o f i s s u i n g t h e n o t i c e u / s . 1 4 8 , t h e m e r i t s o f t h e m a t t e r a r e n o t r e l e v a n t a n d t h e A s s e s s i n g O f f i c e r a t t h a t s t a g e i s r e q u i r e d t o f o rm o n l y a p ri m a f a c i e b e l i e f o r o p i n i o n t h a t i n c o m e c h a r g e a b l e t o t a x h a s e s c a p e d as s e s s m e n t " H e r e i t w o u l d b e w o r t h w h i l e t o m e n t i o n t h a t i n t h e c a s e o f R a j e s h J h a v e r i S t o c k B r o k e r s P v t . L t d . v . A C I T ( 2 0 0 7 ) 2 9 1 I T R 5 0 0 /1 6 1 Ta x m a n 3 1 6 ( S u p r e m e C o u r t ) . T h e H o n ' b l e A p e x C o u r t h a s h e l d t ha t : - " A l l t h a t i s r e q u i r e d f o r t h e R e v e n u e t o a s s u m e v a li d j u r i s d i c t i o n u / s . 1 4 8 i s t h e e x i s t e n c e o f c o g e n t m a t e r i a l t h a t w o u l d l e a d a p e r so n o f n o r m a l p ru d e n c e , a c t i n g r e a so n a b l y t o a n h o n e s t b e l i e f a s t o t h e e s c a p e m e n t o f i n c o m e f r o m a s s e s s m e n t . " A l s o , i n t h e c a s e o f P h o o l c h a n d B a j r a n g L a l v . I T O 2 0 3 I T R 4 5 6 (S C ) , t h e H o n ' b l e A p e x C o u r t h a s h e l d t h a t : - “ A n a s s e s s m e n t c o m p l e t e d u / s . 1 4 3 ( 3 ) b u t l a t e r o n in f o rm a t i o n r e c e i v e d w h i c h w a s i n d e f i n i t e , s p e c i f i c , a n d r e l i a b l e a n d t he A O d u l y r e c o r d e d t h e r e a s o n s f o r h i s b e l i e f t h a t t h e a s s e s s e e h a d n o t f ul l y a n d t r u l y d i s c l o s e d p a r t i c u l a r s o f h i s i n c o m e a n d h e n c e t h e r e w a s e s c a pe m e n t o f i n c o m e . I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 8 H e l d t h a t t h e r e o p e n i n g o f t h e c a s e w a s v a l i d . " A l s o , i n t h e c a s e o f R a y m o n d W o o l l e n M i l l s L t d . 2 3 6 I T R 3 4 ( S C ) , t h e H o n ' b l e A p e x C o u r t h a s h e l d t h a t : - " A s s e s s e e d i d n o t i n c l u d e c e r t a i n d i r e c t m a n u fa c t u ri n g c o s t s a n d f i s c a l d u t i e s i n t h e v a l u a t i o n o f c l o s i n g s t o c k . T h i s c a m e t o l i g h t i n t h e s u b s e q u e n t y e a r s a s s e s s m e n t p r o c e e d i n g s . W e h a v e o nl y t o s e e w h e t h e r t h e r e w a s p r i m a f a c i e s o m e m a t e r i a l o n t h e b a s i s o f w h i c h t h e D e p a r t m e n t c o u l d r e o p e n t h e c a s e . T h e s u f f i c i e n c y or c o r r e c t n e s s o f t h e m a t e r i a l i s n o t a t h i n g t o b e c o n s i d e r e d a t t h e s t ag e o f i s s u e o f n o t i c e u / s . 1 4 8 . " F u r t h e r m o r e , i n t h e c a s e o f J y o t i G o y a l v s . I T O ( I TA N O . 1 2 5 9 / D e l / 2 0 1 0 ) , t h e H o n ' b l e I T A T D e l h i h e l d t h a t : “ A s r e g a r d s t h e o t h e r c o n t e n t i o n o f t h e a s se s s e e t ha t t h e r e o p e n i n g w a s d o n e a m e c h a n i c a l m a n n e r w i t h o u t a p p l i c a t i o n o f m i nd , w e f i n d t h e r e i s n o t h i n g o n r e c o rd t o s u p p o r t s u c h a c o n te n t i o n . T h er e i s a l i v e l i n k b e t w e e n t h e i n f o r m a t i o n w h i c h w a s a v a i l a b l e w i t h t he A s s e s s i n g O f f i c e r a n d h i s f o r m a t i o n o f b e l i e f t h a t i n c o m e h a s e s c a p e d a s se s s m e n t . S u f f i c i e n c y o f su c h i n f o r m a t i o n c a n n o t b e d o n e i n t o w h i l e d e c i d i n g t h e i s s u e o f v a l i d i t y o f r e o p e n i n g . T h e A s s e s s i n g O f f i ce r c a n a l s o n o t m a k e e n q u i r i e s a s v i e w o f t h e m a t t e r , w e a r e i n a g r e e m e nt w i t h t h e f i n d i n g o f t h e L d . C I T ( A ) t h a t t h e r e o p e n i n g o f a s s e s sm e n t u nd e r s e c t i o n 1 4 7 o f t h e A c t w a s v a l i d . ” I n t h e p r e s e n t c a s e , t h e l i v e l i n g b e t w e e n t h e m a t er i a l a v a i l a b l e o n r e c o rd a n d t h e r e a so n s f o r b e l i e f t h a t i n c o m e h a s es c a p e d a s se s s m e n t h a s a l s o b e e n s u f f i c i e n t l y d e m o n s t r a t e d . T o c o n c l u d e , I h a v e e x a m i n e d t h e e n t i r e g a m u t o f f ac t s a n d c i r c u m s t a n c e s s u r ro u n d i n g t h e c a s e a s a l s o t h e m a t e r i a l a v a i l a b l e o n r e c o rd a n d a f t e r d u e a p p l i c a t i o n o f m i n d o n t h e sa m e a s b r o u g h t o u t a b o v e . I , t h e r e f o r e , r e a s o n s t o b e l i e v e , t h a t a n i n c o m e o f R s . 6 5 , 2 0 ,1 5 2 /- , i n t h e c a s e o f t h e a s s e s s e t h a t w a s c h a r g e a b l e t o t a x , u n d e r t h e p ro v is i o n s o f In c o m e T a x A c t 1 9 6 1 h a s e s c a p e d a s s e s s m e n t d u r i n g t h e A Y 2 0 1 1 -1 2 b y r e a s o n o f t h e f a i l u r e o n t h e p a r t o f t h e a s s e s s e e t o d i s c l o s e f u ll y a n d t r u l y a l l m a t e r i a l f a c t s n e c e s s a r y f o r i t s a s s e s s m e n t w h i c h h a s c o m e to t h e n o t i c e s u b s e q u e n t l y a n d h e n c e l a n o t i c e u / s . 1 4 8 i s r e q u i re d t o b e i s s u e d i n t h e c a s e o f t h e a s s e s s e e f o r A . Y . 2 0 1 1 - 1 2 . T h e r e f o r e , t h i s i s a f i t c a s e f o r i s s u e o f n o t i c e u/ s . 1 4 8 o f t h e I T A c t , 1 9 6 1 . A c c o rd i n g l y , a p r o p o s a l , i n t h e p r e s c r i b e d p ro f o rm a , i s p u t u p f o r y o u r k i n d p e r u s a l , c o n s i d e r a t i o n a n d n e c e s sa r y a p p ro v a l u / s . 1 5 ( 1 ) o f t h e I T A c t , 1 9 6 1 f o r i s s u e o f n o t i c e u / s . 1 4 8 o f t h e A ct i n t h e c a s e o f t h e a s s e s s e e f o r t h e y e a r u n d e r c o n s i d e r a t i o n . ” 6. W h e n t h e m a t t e r w a s c a l l e d f o r h e a ri n g, t h e l d . c ou n s e l f or t he a s s e s s e e i n s u p p o rt o f i t s C r os s O b j e c t i o ns , s ub m i tt e d t h a t th e r e a s on s re c o rd e d u nd e r Se c t i on 1 48 ( 2 ) d o n o t m e e t th e p r e -re q u i s i t e s o f Se c t i o n 14 7 of t he A c t a n d h e n c e th e j ur i s d i c t i o n a s s u m e d in c on s e q ue n c e o f s u c h I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 9 i n va l i d r e a s o n s a r e w i t h ou t t he s a n c t i on o f l a w . 6. 1 T h e l d. c o un s e l f i rs t l y c on t e n d s t h a t t h e j ur i sd ic t i o n a s s um e d un d e r Se c t i on 1 4 7 i t s e l f i s i n c or r e c t a nd c o n t r a r y to th e s c he m e of t h e A c t . In t he i n s t a n t c a s e , t he c a s e w a s r e op e ne d o n t h e p r e mi s e t h a t s e a rc h a nd s e i z u r e o p e ra t i o n u n de r S e c ti o n 1 32 o f t h e A c t w a s c o n du c t e d on 03 . 1 0. 2 0 23 o n R a j e n dr a J a i n , Sa nj a y C h o ud ha r y a n d Dh a r m i c ha n d J a i n G r ou p b y I n ve s t i ga t i o n U n i t M u m ba i . A s a l l e ge d i n th e r e a s on s , t he s t a t e m e nt s o f va r i ou s p e r s o n s w e re r e c o r de d a n d a re p o r t w a s p r e pa r e d ba s e d o n t h e m a t e ri a l ga t he r e d a n d o t h e r o bs e r va ti on s i n t h e c ou r s e o f s e a rc h . T he s a i d i n v e s t i ga t i o n r e p o r t s u p pl i e d t o As s e s s i n g O f f i c e r of t he A s s e s s e e i s t h e ge n e s i s of t h e a s s u m pt i o n o f j ur i s dic t i o n u n de r Se c t i o n 14 7 i n q ue s ti o n. I n t hi s c o n te x t , t he l d . c ou n s e l su bm i t s t h a t w he r e s e a r c h ha s be e n c on du c t e d o n th e p re m i s e s o f t h i r d p a r t y and a n y m a t e ri a l i s di s c o ve re d w hi c h pe r t a i ns t o t h e a s s e s s e e h e re u n de r, t he a va i l a b l e c o ur s e of a c t i on f o r a s s e s s m e n t w o ul d be , a s p r o vi de d un d er Se c t i o n 1 53 C of t he A c t . In s uc h a s i t u a t i o n, t h e r e c o u rs e t o S e c t i o n 147 a s w r o n gl y a d op t e d b y t he A s s e s s i n g O f f i c e r i s f o re c l o s e d a n d n o l on ger a va i l a b l e i n l a w . T he j u ri s d i c t i on of t h e A s s e s s i n g O f f i c e r un de r Se ct i on 1 47 s t a nd s o u s t e d du e t o m a t e r i a l s t a te d t o ha ve be e n di s c o ve re d i n th e c ou r s e of s e a r c h w h i c h t e n ds to i n c r i m i na t e t h e t ra n s a c t i on s c a r r i e d ou t b y t he a s s e s s e e w i t h th e s e a r c he d pe r s o n. 6. 2 . P e r c on t ra , t h e l d . D R p o in t e d o ut t h a t t h e S che m e of t he A c t do e s no t s o p ro v id e a s c an va s s e d o n b e ha l f of t h e a s s e s se e . T h e l d . D R p oi n t s ou t t h a t t h e j ur i s d i c ti o n u n d e r Se c t i o n 1 47 s t a n d s o u s t e d on l y w h e re j ur i s d i c t i o n u nd e r S e c t i o n 1 5 3C ha s b e e n va l i d l y a ss um e d w h i c h , i n t u r n , de p e nd s o n f u l f il l i n g t h e p re - c o n di t i o ns f o r i n voc at i o n o f j ur i s d ic t i o na l pa r a m e t e rs o f S e c ti o n 1 5 3C o f t h e A c t . I n t he i n s t ant c a s e , i n th e a bs e nc e of a ny ‘ s a t is f a c t i o n n ot e ’ f r om t h e A s s e s s i n g O f f i ce r o f t h e s e a r c h pe r s o n, t he A s s e s s i n g O f f i c e r c o ul d n o t h a ve a s s u m ed j u r i s di c t i o n un d e r Se c t i on 1 5 3 C o f t h e A c t . T he p a ra m e t e r s f or a s s um p ti o n o f j u r is di c t i o n un d e r Se c t i o n 1 5 3C w e re no t a va i l a b l e t o t h e A s s e s si n g O f f i c e r . T he A s s e s s i n g O f f i c e r h ow e ve r i nd e p e n d e nt l y m e t t he p r er e q ui s i t e s f o r I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 10 a s s u m pt i o n of j ur i s d i c t i o n un d e r S e c t i o n 1 4 7. T h e r ef o re , a t t h e t i m e of i s s u a nc e o f n ot i c e u n de r Se c t i o n 1 4 7, t h e re w a s n o s t a t u t o r y e m b a r go f o r a s s u m pt i o n o f j u r i s d i c t i o n u nd e r Se c t i on 14 7 of t he A c t. 6. 3 T h e l d . c o u ns e l f o r t h e a s s e s s e e ne x t c o nt e n ds t h a t t he r e a s on s ha ve b e e n r e c o r d e d s o l e l y on t h e ba s i s of s o m e i n ves t i ga t i on r e p o rt c om m u n ic a t e d t o t h e A s s e s s i n g O f f i c e r h e re i n . T h e As s e s s i n g O f f i c e r ho w e ve r h a s f a i l e d t o a p pl y hi s m i n d t o t h e c o nt e n ts of t h e i n ve s t i ga t i on re p o r t i nd e pe n d e n t l y . T h e s t a t e m e n t of R a j e n dr a J a in a s q uo t e d i n t he re a s o n s re c o r d e d h a s b e e n t a ke n a s a go s p e l t r ut h wi t ho ut a n y pr e l i m i na r y i n q u i r y on t he p ro pr i e t y o f d e po s i t i on s m a de b y h i m . T he A s s e s s i n g O f f i c e r h a s f u rt h e r f a i l e d t o a p pl y h i s mi n d to t h e a s s e r t i on s m a de i n pa r a gr a p h 4 s ub p a r a g ra p h s ( i i i ) a n d ( i v) of t h e r e a s o ns w he r e b y, i t w o ul d g i ve a n i m pr e s s i o n t h a t t h e s u p pl i e r K r i ya I m p e x P vt . Lt d . ( K ri ya ) w a s , i n r e a l , i n vo l ve d i n d ia m o n d t r a di n g in hi s ow n ri g ht . T he l d. c o u n s e l f u rt h e r p oi n t s ou t t ha t t he A s s e s s i n g Of f i c e r h a s f a il e d t o a pp l y hi s m i nd t o t he t w o d i f f e r e n t f i gu re s , i . e . , R s . 2 5, 1 2, 59 0/ - a n d R s . 65 , 2 0 , 1 5 2 / - c r o p p e d u p i n th e In ve s t i ga t i o n R e port f o r t he s a m e i n vo ic e . T h e a s s e s s e e h a d p u r c h a s e d d i a m o nd s i n t h e p re s e n t c a s e a s p e r i n vo ic e d a t e d 0 9. 1 1 . 20 10 o f d i f f e re n t w e i gh t s r a n g in g b e t w e e n 1 02 . 19 c t s t o 13 2 . 34 c t s f o r w h i c h p ur c h a s e va l ue o f R s . 2 5 , 12 ,59 0 / - w a s qu a nt i f i e d i n t h e i n v oi c e i s s ue d b y K r i ya . I t i s n o t k no w n a s t o h o w a no t he r va lu e o f R s . 65 , 2 0 , 1 5 2 / - h a s b e e n de r i ve d i n t h e I n ve s t i ga t i on R e p or t . T he A s s e s s i n g O f f i c e r ha s f a il e d t o a p p l y hi s m i nd t o suc h f a c ts a n d on th i s pr e m i s e a l s o th e r e a s o ns re c o r de d a r e vi t i a t e d b y the no n a p p l i c a ti o n o f m i nd . 6. 4 J oi n i n g t h e p oi n t i n i s s ue , t he l d. D R s t r o n gl y r a i s e d i ts o bj e c t i on t o s u c h l i n e o f c o n t e n ti o n a n d p oi n t e d o ut t he re a so n s re c o rd e d i s a s e l a b o ra t e a s i t c ou l d be . T h e A s s e s s i n g O f f i c e r ha s t a k e n i n t o a c c o un t t he na t u re of i nf o rm a t i o n r e c e i ve d f r o m t he I n ve s t i ga t ion W i n g. T h e r e po rt of t he In ve s t i ga t i o n W i n g ha s c l e a rl y i m p l i c a t e d t he a s s e s s e e a s a be n e f i c i a r y of t h e b o gu s p u rc h a s e t r a ns a c t i o ns f r o m K r i ya c on t r ol l e d b y J a i n & C h o ud ha r y G r o up . T he s e p a rt i e s ha ve in u n e qui vo c a l te r m s I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 11 a dm i t t e d i n t h e c o u r s e of s e a r c h t h a t t he y w e r e n o t d oi n g a n y re a l bu s i n e s s a nd w e re on l y p r o vi d i n g f a l s e a c c o m m o da t i on e nt r i e s . T h e s e pa r t i e s / s u pp l i e r s ha v e a l s o a d m i t t e d t ha t no p h y s i ca l g o od s w e re ha n d e d o ve r b y t he m t o t he p a rt i e s t o w h om s a l e s h a ve be e n s h o w n i n th e i r b o ok s of a c c o un t s . T h e A s s e s s i n g O f f i c e r h a s n a rr a t e d d e ta i l e d a c c o un t o f t he f a c t s a n d c i rc u m s t a n c e s d i s c e r n i b l e f r o m t he i nf o rma t i o n r e c e i ve d a nd f o r m e d a b o na fi d e b e l i e f w h i c h o nl y ne e d s t o b e p r i m a f ac i e a t t h e t i me of r e o p e ni n g t h e a s s e s s m e n t . T h e b e l i e f e ma n a te s f rom t h e re l e va nt m a t e r i a l . T he l d . D R t hu s c o nt e n ds th a t t he o nu s u po n R e ve n u e a t t he t i m e o f i n v o k i n g Se c t i on 1 4 7 w a s d ul y d i s c ha r ge d i n t he pr e s e n t c a s e i n vi e w of t he i n f o rm a t i o n w hi c h i s s p e c i f i c i n n a t ur e a n d r e l i a b l e in c ha r a c t e r . T h e l d. D R a l s o po i nt e d o u t t h a t th e r e is n o q u e s t i o n of bo r ro w e d s a t i s f a c t i o n a s a l le ge d , i n t h e l i gh t o f pa ra g ra p h 4 o f t he re a s o n s r e c o r de d . 7. W e h a ve d i s p a s s i on a t e l y c o ns i de r e d t h e ri va l s ubm i s s i o ns o n t he va l i d i t y o f a s s u m p t i o n o f j u r is di c t i on a s s um e d b y the A s s e s s i n g O f f i c e r un d e r Se c t i o n 1 4 7 o f t h e A c t . 8. O n t he p e r us a l of t h e r e a s on s re c o rd e d , i t i s man i f e s t t ha t t he A s s e s s i n g O f f ic e r h a s a c te d u nd e r S e c ti o n 14 8 r . w . Se c t io n 14 7 of t he A c t on t h e b a s i s o f i n f o r m a ti o n s u p p li e d b y t he I n ve s t i ga t i o n W i n g of t he D e p a rt m e n t w h e r e in i nc r i m i n a t i n g f a c t s w e r e s t a te d t o b e u n e a r t he d . T he a s s e s s e e i n t he i n s t a nt c a s e h a s e nt e r e d i nt o c e rt ai n p u rc h a s e t ra n s a c t i on s of d ia m o n ds w i t h M / s . K r i ya w h i c h s up pl i e r w a s f ou nd t o be b e l on gin g to J a i n & C h o ud ha r y G r o up o n w ho m t h e s e a rc h u n de r S e ct i o n 1 3 2 w a s c a rr i e d o u t o n 0 3 . 1 0. 2 0 13 . It w a s o bs e r ve d t h a t t h e s e a rc h e d pe r s o n / gr o up i n a de p os i ti o n o n o a t h h a s a d m i t t e d t h a t t h ey h a ve n o t b e e n d o i n g a ny re a l bu s i n e s s a n d a re o nl y pr o vi d in g a c c o m m od a ti o n e nt r i e s t o va r i ou s p a rt i e s a s r e c or de d i n t h e i r b oo k s . It w a s f u r t h e r a d m it t e d t ha t n o ph ys i c a l go o ds a re h a n de d o ve r t o t he p a r ti e s t o w hi c h s a l e s ha ve b e e n s h ow n i n t he b oo k s . I t w a s f u r t he r f o u n d t ha t a s s e ss e e h e re i n ha s a l s o e nt e r e d i n t o p ur c ha s e t r a ns a c ti o n w i t h K r i ya a n d t hu s a be n e f i c i a ry o f s u c h a c c o m m od a t i o n e nt r i e s . In t h i s ba c k gr o un d, t h e A s s e s s i n g O f f i c e r I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 12 ha s p e r u s e d t he o bs e r va t io n s of t he i n v e s t i ga t io n te a m a n d f or m e d h i s ow n o p i ni o n t h a t t h e p u rc h a s e t ra n s a c t i on s s ho w n b y t h e a s s e s s e e w i t h K r i ya a r e s h a m t ra n s a c t i on s in t h e na t u r e of a c c om mo d a t i o n e nt r i e s . I n t he c i rc u m s t a nc e s , i t c a n no t b e s a i d t h a t A s s e s s i n g O f f i c e r d i d no t h a ve t a n gi bl e m a t e ri a l t o f o r m b e l i e f t ha t i nc o m e c h a r gea bl e t o t a x h a s e s c a pe d a s s e s s m e n t . T he a s s e s s m e nt i n t h e in s t a n t ca s e w a s e a r l i e r c on c l ud e d u n de r S e c ti o n 1 4 3 ( 1 ) of t he A c t a nd t he r e w a s no oc c a s i o n f o r t he A s s e s s i n g O f f i c e r t o l o o k i n t o s u c h f a c t s . T h e c a s e o f t h e a s s e s s e e i s s q ua r e l y c o ve re d a ga i n s t t h e a s s e s s e e a s re p o r t e d in C h ok s h i V a c hh ar aj Ma k a nj i a nd C o. v s . A C I T , ( 20 1 6 ) 2 4 3 t ax m a n n. c o m 4 65 ( G u j ). T he H o n ’ b le Su pr e m e C o ur t i n t he c a s e o f R a j e s h J h av e r i S to c k B r ok e r s P v t . Lt d . , 2 91 I T R 5 0 0 (S C ) ha s o b s e r ve d t h a t t h e R e ve nu e n e e d n ot t o p r o ve t he e s c a p e m e nt c o nc l u s i ve l y a n d r e op e n i n g is j us t i fi e d w he r e t h e m a t e ri a l re f e rr e d f o r f o r m a t i o n o f b e l i e f a r e re l e va n t . 9. As noted in the preceding paragraphs, it is the case of the assessee that the provisions of section 153C of the Act ought have been invoked in the circumstances of the case which specifically provides for assessment of third person (assessee herein) based on incriminating material discovered in relation to third person search proceedings in another case. It is the case of the assessee that where specific jurisdiction is provided under section 153C of the Act, the recourse to section 147 for reassessment of the concluded assessment is impermissible in law. The identical issue raised has been dealt with by the Co-ordinate Bench in the case of Shailesh S. Patel vs. ITO (2018) 97 taxmann.com 570 (AHD). The Co- ordinate Bench has analysed the scheme of Act and answered the controversy against the assessee in following terms. 1 4 . W e s h a l l n o w a d d r e ss o u r s e l v e s t o t h e s e c o n d l eg a l o b j e c t i o n . O n b e h a l f o f t h e a s s e s s e e , i t i s c o n t e n d e d t h a t i n v i e w o f o v e r - ri d i n g p r o v i s i o n s o f S e c t i o n 1 5 3 C o f t h e A c t i n t h e c a s e of s e a r c h a s s e s sm e n t , t h e a s s e s s m e n t p r o c e e d i n g s i n th e h a n d s o f t h e a s s es s e e a re n o t a m e n a b l e t o j u r i s d i c t i o n u n d e r s . 1 4 7 / 1 4 8 o f t h e A c t a n d t h e r e f o r e , e n t i r e a s s e s s m e n t p r o c e e d i n g s i t s e l f i s a n u l l i t y in t h e e y e s o f l a w . I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 13 1 4 . 1 B e f o r e w e p r o c e e d f o r d e t e r m i n a t i o n o f i s s u e , i t w o u l d b e p e r t i n e n t t o r e f e r t o t h e p r o v i s i o n s o f S . 1 5 3 C a n d a l s o S . 1 4 7 o f t h e A c t , a s a p p e a r i n g i n t h e s t a t u e a t t h e r e l e v a n t t i me , t o t h e e x t e n t a s m a y b e r e l e v a n t i n t h e c o n te x t . " A s s e s sm e n t o f i n c o m e o f a n y o t h e r p e r s o n. - 1 5 3 C . [ ( 1 ) N o t w i t h s t a n d i n g a n y t h i n g c o n t a i n e d i n s e c t i o n 1 3 9 , s e c t i o n 1 4 7 , s e c t i o n 1 4 8 , s e c t i o n 1 4 9 , s e c t i o n 1 5 1 a n d s e c t i o n 1 5 3 , w h e r e t h e A s s e s s i n g O f f i c e r i s s a t i s f i e d t h a t a n y m o n e y , b u l l i o n , j e w e l l e r y o r o t h e r v a l u a b l e a r t i c l e o r t h in g o r b o o k s o f a c c o u n t o r d o c u m e n t s s e i z e d o r r e q u i s i t i o n e d b e l o n gs o r b e l o n g t o a p e r s o n o t h e r t h a n t h e p e r s o n r e f e r r e d t o i n s ec t i o n 1 5 3 A , t h e n t h e b o o k s o f a c c o u n t o r d o c u m e n t s o r a s s e t s s ei z e d o r r e q u i s i t i o n e d s h a l l b e h a n d e d o v e r t o t h e A s s e s s i n g O f f i c e r h a v i n g j u r i s d i c t i o n o v e r s u c h o t h e r p e r s o n a n d t h a t A s s e s s i n g O f f i c e r s h a l l p r o c e e d a g a i n s t e a c h s u c h o t h e r p e r son a n d i s s u e s u c h o t h e r p e r so n n o t i c e a n d a s s e s s o r r e a s s e s s i n co m e o f s u c h o t h e r p e r so n i n a c c o rd a n c e w i t h t h e p r o v i s i o n s o f se c t i o n 1 5 3 A : ] [ P r o v i d e d t h a t i n c a s e o f s u c h o t h e r p e r s o n , t h e r e f e r e n c e to t h e d a t e o f i n i t i a t i o n o f t h e s e a r c h u n d e r s e c t i o n 1 3 2 o r m a k i n g o f r e q u i s i t i o n u n d e r s e c t i o n 1 3 2 A i n t h e s e c o n d p r o v i so t o [ s u b - s e c t i o n ( 1 ) o f] s e c t i o n 1 5 3 A s h a l l b e c o n st r u e d a s r e f e r e n c e to t h e d a t e o f r e c e i v i n g t h e b o o k s o f a c c o u n t o r d o c u me n t s o r a s s e t s s e i z e d o r r e q u i s i t i o n e d b y t h e A s s e s si n g O f f i c e r h av i n g j u r i s d i c t i o n o v e r s u c h o t h e r p e r s o n .] " * * * * * * * * * * * " [I n c o m e e s c a p i n g a s s e s s m e n t. 1 4 7 . I f t h e [ A s s e s s i n g ] O f f i c e r [ h a s r e a so n t o b e l ie v e ] t h a t a n y i n c o m e c h a rg e a b l e t o t a x h a s e s c a p e d a s s e s s m e n t f o r a n y a s s e s s m e n t y e a r , h e m a y , s u b j e c t t o t h e p r o v i s i o n s o f s e c t i o n s 1 4 8 t o 1 5 3 , a s s e s s o r r e a s s e s s s u c h i n c o m e a n d a l s o a n y o t h e r i n c o m e c h a rg e a b l e t o t a x w h i c h h a s e s c a p e d a s s e s s m en t a n d w h i c h c o m e s t o h i s n o t i c e s u b s e q u e n t l y i n t h e c o u r se o f t h e p ro c e e d i n g s u n d e r t h i s s e c t i o n , o r r e c o m p u t e t h e l os s o r t h e d e p r e c i a t i o n a l l o w a n c e o r a n y o t h e r a l l o w a n c e , a s th e c a s e m a y b e , f o r t h e a s s e s s m e n t y e a r c o n c e r n e d ( h e re a f t e r i n t h i s s e c t i o n a n d i n s e c t i o n s 1 4 8 t o 1 5 3 r e f e r r e d t o a s t h e r e l e va n t a s s e s s m e n t y e a r ) : P r o v i d e d t h a t w h e r e a n a s s e s sm e n t u n d e r s u b - s e c t i o n ( 3 ) o f s e c t i o n 1 4 3 o r t h i s s e c t i o n h a s b e e n m a d e f o r t h e re l e v a n t a s s e s s m e n t y e a r , n o a c t i o n s h a l l b e t a k e n u n d e r t h is s e c t i o n a f t e r I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 14 t h e e x p i r y o f f o u r y e a r s f r o m t h e e n d o f t h e r e l e v an t a s s e s s m e n t y e a r , u n l e s s a n y i n c o m e c h a r g e a b l e t o t a x h a s e s c a pe d a s s e s s m e n t f o r s u c h a s s e s s m e n t y e a r b y r e a s o n o f t he f a i l u r e o n t h e p a r t o f t h e a s s e s s e e t o m a k e a r e t u rn u n d e r s e ct i o n 1 3 9 o r i n r e s p o n s e t o a n o t i c e i s s u e d u n d e r s u b s e c t i o n ( 1 ) o f s e c t i o n 1 4 2 o r s e c t i o n 1 4 8 o r t o d i s c l o s e f u l l y a n d t r u l y a l l m a t er i a l f a c t s n e c e s s a r y f o r h i s a s s e s s m e n t , f o r t h a t a s s e s s m e n t ye a r : [ P r o v i d e d f u r t h e r - - - - -- " 1 4 . 2 O n a b a r e r e a d i n g o f S . 1 5 3 C n o t e d a b o v e , i t is s e l f e v i d e n t t h a t t h i s p r o v i s i o n g o v e rn s a s s e s s m e n t o f i n c o m e o f a p er s o n o t h e r t h a n a p e r so n i n w h o s e c a s e s e a r c h w a s i n i t i a t e d . 1 4 . 2 .1 A l s o , t h i s p r o v i s i o n a l o n g w i t h o t h e r p ro v i si o n s o f S . 1 5 3 A t o 1 5 3 D e x e r t s a n o v e r r i d i n g e f f e c t o v e r t h e p r o v i s i o ns o f s e c t i o n s 1 3 9 , 1 4 7 , 1 4 8 , 1 4 9 , 1 5 1 a n d 1 5 3 o f t h e A c t s i n c e t h e s e pr o v i s i o n s c o n t a in n o n o b s t a n t e c l a u s e . S e c o n d l y , t h e a s s e s sm e n t p r o c ee d i n g s u n d e r S . 1 5 3 C a r e f a r m o r e o n e r o u s q u a S . 1 4 7 i n t h e s e n s e th a t p r o c e e d i n g s a r e i n i t i a t e d f o r s i x a s s e s s m e n t y e a r s i m m e d i a t e l y p r e ce d i n g t h e y e a r i n w h i c h s e a r c h u / s . 1 3 2 i s i n i t i a t e d o r r e q u i s i t i o n is m a d e u / s . 1 3 2 A. T h i r d l y , t h e p r o v i s i o n s o f s e c t i o n 1 5 3 C a r e a n a lo g ou s t o s e c t i o n 1 5 8 BD o f t h e A c t . T h e r e f o r e , d e c i s i o n o f t h e A p e x C o u r t in t h e c a s e o f M a n i sh M a h e s h w a r i 2 8 9 I T R 3 4 1 S C w o u l d a l s o a p p l y w h e r e a ss e s s m e n t i s t o b e m a d e u / s . 1 5 3 C . A s p e r t h e a f o r e s a i d d e c i s i o n , t h e p r e c o n d i t i o n f o r i n v o k i n g j u r i s d i c t i o n f o r i s s u e o f n o t i c e u / s . 1 5 3 C i s t h a t t h e A O m u s t " r e c o r d s a t i s f a c t i o n " a s t o t h e s e i z e d m a t e r i a l ‘ b el o n g s t o ’ t h e t h i r d p e r so n i . e . a s s e s s e e . 1 4 . 2 .2 U n d e r S . 1 5 3 C a s a p p l i c a b l e t o t h e r e l e v a n t a s s e s s m e n t y e a r in a p p e a l , w h e r e t h e A s s e s s i n g O f f i c e r o f t h e s e a r c h e d p e r s o n i s s a t i s f i e d t h a t a n y b o o k s o f a c c o u n t , o r d o c u m e n t s s e i z e d o r re q u i s i t i o n e d ' b e l o n g t o ' o r b e l o n g s t o a n y p e r s o n , o t h e r t h a n t h e p e r s o n r e f e r r e d t o in s e c t i o n 1 5 3 A , t h e n t h e b o o k s o f a c c o u n t o r d o c u m e nt s o r a s s e t s s e i z e d o r r e q u i s i t i o n e d sh a l l b e h a n d e d o v e r t o t h e A s s e s si n g O f f i c e r h a v in g j u r i s d i c t i o n o v e r s u c h o t h e r p e r so n f o r su c h j u r i s di c t i o n a l A s s e s s i n g O f f i c e r t o c o m p l e t e t h e a s s e s s m e n t . T h i s p o s i t i o n h a s b e e n c o n f i r m e d b y t h e H o n ’ b l e S u p r e m e C o u r t i n t h e c a s e o f C I T v s . C a l c u t t a K n i t w e a r s 3 3 8 I T R 2 3 9 ( S C ) . 1 4 . 2 .3 T h e r e f o r e , q u e s t i o n p o s e d w h e t h e r , i n v i e w of t h e p h ra s e o l o g y e m p l o y e d i n t h e s e c t i o n , i f t h e b o o k s o f a c c o u n t b el o n g t o t h e p e r so n s e a r c h e d b u t e n t r y i n s u c h b o o k s r e f l e c t t h e u n d i s cl o s e d i n c o m e o f t h e t h i r d p a r t y t h e n , w h e t h e r t h e A O c a n a s s u m e j u r i s d ic t i o n u n d e r s . 1 5 3 C t o a s s e s s s u c h u n d i s c l o s e d i n c o m e o r n o t . T h e e x p re s s i o n ‘ b e l o n g s t o ’ w a s a su b j e c t m a t t e r o f d e b a t e . T h e p o i n t i n i s s u e w a s e x a m i n e d b y I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 15 H o n ’b l e D e l h i H i g h C o u r t i n P e p s i c o H o l d i n g s P v t . Lt d . v s . A C I T 3 7 0 I T R 2 9 5 ( D e l . ) . I t o b s e r v e d i n e s s e n c e t h a t e x p r e ss i o n b e l o n g i n g to a s s e s s e e i m p l i e s s o m e t h i n g m o r e t h a n i d e a o f c a su a l a s so c i a t i o n . I t w a s o b s e r v e d b y t h e H o n ' b l e D e l h i H i g h C o u r t t h a t S. 1 5 3 C c a n n o t b e i n v o k e d u n l e s s t h e A O i s s a t i s f i e d f o r c o g e n t r e a s on s t h a t t h e s e i z e d d o c u m e n t s d o n o t b e l o n g t o t h e s e a r c h e d p e r s o n . I t w a s o b s e r v e d t h a t f i n d i n g o f p h o t o c o p i e s w i t h t h e s e a r c h e d p e r s o n d o es n o t n e c e ss a r i l y m e a n a n d i m p l y t h a t t h e y " b e l o n g " t o t h e p e r s o n h o ld i n g t h e o r i g i n a l s . T h e d i s t i n c t i o n b e t w e e n " b e l o n g s t o " a n d " r e l a t e s to " o r " r e f e r s t o " m u s t b e b o r n e i n m i n d b y t h e A O . T h e A ss e s s i n g O f f ic e r s s h o u ld n o t c o n f u s e t h e e x p r e s s i o n " b e l o n g s t o " w i t h t h e e x p r e ss i o n s " r e l a t e s t o " o r " r e f e r s t o " . T h e H o n ' b l e C o u r t w e n t o n t h e e x p l a i n t h e p u rp o r t o f t h e e x p r e s s i o n b y g i v i n g i l l u s t r a t i o n t h a t a r e g i s t e r e d s a l e d e e d , f o r e x a m p l e , " b e l o n g s t o " t h e p u r c h a s e r o f t h e p r o p e r t y a l t h o u g h i t o b v i o u s l y " r e l a t e s t o " o r " r e f e r s t o " t h e v e n d o r . In t h i s e x a m p l e i f t h e p u r c h a s e r ' s p r e m i s e s a r e s e a r c h e d a n d t h e r e g i s t e r ed s a l e d e e d i s s e i z e d , i t c a n n o t b e s a i d t h a t i t " b e l o n g s t o " t h e v e n d o r j u s t b e c a u s e h i s n a m e i s m e n t i o n e d i n t h e d o c u m e n t . I n t h e c o n v e r s e c a s e i f t h e v e n d o r' s p r e m i s e s a r e s e a r c h e d a n d a c o p y o f t h e s a l e d e e d is s e i z e d , i t c a n n o t b e s a i d t h a t t h e s a i d c o p y " b e l o n g s t o " t h e p u r c h a se r j u s t b e c a u s e i t r e f e r s t o h i m a n d h e ( t h e p u r c h a s e r ) h o l d s t h e o r i gi n a l s a l e d e e d . In t h i s l i g h t , i t i s o b v i o u s t h a t n o n e o f t h e t h r e e s et s o f d o c u m e n t s - c o p i e s o f p r e f e r e n c e s h a r e s , u n s i g n e d l e a v e s o f c h e q u e b o ok s a n d t h e c o p y o f t h e s u p p l y a n d l o a n a g r e e m e n t - c a n b e s a i d t o " b e lo n g t o " t h e p e t i t i o n e r . 1 4 . 2 .4 W e a l s o n o t i c e t h a t t h e l e g i s l a t u r e a p p a r e n tl y t o o k n o t e o f t h e r e s t r i c t e d s c o p e o f e x p r e s s i o n ' b e l o n g t o ' e m p l o y e d i n S . 1 5 3 C w h i c h , t o s o m e e x t e n t , c u r t a i l e d t h e p o w e r o f t h e d e p t t . t o in v o k e S . 1 5 3 C o f t h e A c t . T h u s , s u i t a b l e l e g i s l a t i v e c h a n g e s w e r e b ro u g ht w i t h e f f e c t f r o m 1 - 6 - 2 0 1 5 t o r e l a x t h e i m p e d i m e n t f o r i m p l e m e n t a t i o n of t h e S e c t i o n 1 5 3 C . A s n o t e d e a r l i e r , a s p e r e x i s t i n g p ro v i s i o n s , s e c t io n 1 5 3 C c o u l d b e i n v o k e d a g a i n s t s u c h o t h e r p e r so n o n l y w h e n b o o k s of a c c o u n t , e t c . , b e l o n g e d t o h i m a n d n o t o t h e r w i s e . H o w e v e r , t o a d d re s s t h e p o i n t , s e c t i o n 1 5 3 C h a s b e e n a m e n d e d t o w i d e n t h e p o w e r s of t h e A s s e s s i n g O f f i c e r o f t h e s e a r c h e d p e r s o n t o h a n d o v e r t h e b o ok s o f a c c o u n t o r d o c u m e n t s t o t h e j u r i s d i c t i o n a l A s s e s s i n g O f f i c e r ev e n i f t h e s e m e r e l y ‘ p e r t a i n s o r p e r t a i n t o ’ , o r a n y i n f o r m a t i o n c o n t a in e d t h e r e i n m e r e l y r e l a t e s t o t h e o t h e r p e r s o n . T h u s , a f t e r t h e l e g i s la t i v e a m e n d m e n t , n o w t h e d e p p t . i s w e l l e q u i p p e d t o e x e r c i s e j u r i s d i c t i on u n d e r S . 1 5 3 C e v e n i f t h e d o c u m e n t s e i z e d m e r e l y p e r t a i n s o r p e r t a i n to o r a n y i n f o r m a t i o n c o n t a i n e d t h e r e i n r e l a t e s t o t h e o t h e r p e r s o n w i t h ou t t h e n e c e s s i t y o f t h e s e d o c u m e n t s e t c . t o b e b e l o n g i n g t o s u c h o t h e r p e r s o n s . T h u s , i n t h e l i g h t o f t h e j u d i c i a l p r e c e d e n t o f t h e H o n ' b l e D e l hi H i g h C o u r t a n d f u r t h e r i n v i e w o f t h e s u b s e q u e n t l e g i s l a t i v e a m e n dm e n t , t h e d i f f e r e n c e b e t w e e n t h e e x p r e s s i o n ' b e l o n g t o ' a n d ' p e r t a i n t o ' / ' r e l a t e t o ' a r e I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 16 v i s i b l y c l e a r . S i m i l a r l e g a l p o s i t i o n h a s b e e n e n u nc i a t e d b y t h e H o n ’ b l e G u j a ra t H i g h C o u r t i n t h e c a s e o f K a m l e s h b h a i D h a ram sh i b h a i P a t e l v s . C I T 2 6 3 I T R 3 6 2 (G u j ) . H e n c e , i n t h e l i g h t o f a b o v e d i s c u s s i o n , w e a r e o f t h e v i e w t h a t t h e l o o s e p a p e r a n d o t h e r d o c um e n t s a n d d i a r i e s e t c . f o u n d f r o m t h e p o s s e s s i o n o f t h e s e a r c h e d p e r so n c a n n o t b e s a i d t o b e b e l o n g i n g t o t h e a s s e s s e e o r o t h e r t h i r d p a r t i e s m e r e l y b e c a u s e t r a n s a c t i o n n o t e d t h e r e i n r e l a t e t o o r p e r t a i n t o as s e s s e e a n d / o r s u c h o t h e r p e r so n s . T h i s v i e w i s a l s o f o r t i f i e d b y e x p r es s p r o v i s i o n o f S . 1 3 2 (4 A ) o f t h e A c t w h e r e b y t h e p r e s u m p t i o n o f d o c u me n t s e t c . f o u n d i n c o u r s e o f s e a r c h w e i g h s t o w a r d s s e a r c h e d p e r s o n . 1 4 . 3 A s n o t e d , p o s t t h e l e g i s l a t i v e a m e n d m e n t , a n y b o o k s o f a c c o u n t s o r d o c u m e n t s s e i z e d o r r e q u i s i t i o n e d r e q u i r e s t o b e m e r e l y p e r t a i n t o o r r e l a t e t o t h e a s s e s s e e i n c o n t r a s t t o t h e e a r l i e r po s i t i o n w h e r e s u c h b o o k s / d o c u m e n t s s e i z e d e t c . m u s t n e c e s s a r i l y b e l o n g t o t h e t h i r d p e r s o n i . e . a s s e s s e e h e r e i n . T h u s , f o r t h e a s s e s s m e n t y e ar 2 0 1 2 - 1 3 i n q u e s t i o n , w h i c h i s g o v e r n e d b y p r e -a m e n d e d l a w o f S e c t i o n 1 5 3C o f t h e A c t , t h e p r o v i s i o n s o f S e c t i o n 1 5 3 C o f t h e A c t c o u l d n o t b e i n v o k e d u n l e s s d o c u m e n t s e i z e d e t c . ‘ b e l o n g s t o ’ a p e r so n ( a s s e s s ee h e r e i n ) o t h e r t h a n t h e p e r s o n s e a r c h e d . T h u s , w h i l e t h e c a s e o f t h e as s e s s e e c a n b e r e o p e n e d w h e r e t h e d o c u m e n t s e i z e d i n t h e c a s e o f se a r c h e d p e r so n g i v e s r i s e t o r e a s o n a b l e i n t e r f e r e n c e o f e s c a p e m e n t o f i n c o m e i n t h e h a n d s o f t h i r d p e r s o n i . e . a s s e s s e e , s a m e i s n o t t ru e f o r i n v o k i n g S e c t i o n 1 5 3 C o f t h e A c t i n t h e h a n d s o f t h e a s s e s s ee u n l e s s t h e d o c u m e n t s e i z e d o r r e q u i s i t i o n e d a c t u a l l y b e l o n g t o t h e a s s e s s e e . T h u s , t h e i n d e p e n d e n t p o w e r a v a i l a b l e t o A O o f t h e t h i r d p e r s o n u n d e r s . 1 4 7 o f t h e A c t c a n n o t b e a r t i f i c i a l l y c u r t a i l e d i n s u c h a s i t u a t i o n . 1 4 . 4 P r o v i s i o n s o f S e c t i o n 1 5 3 C a n d S e c t i o n 1 4 7 c a rr y m a n y d i s t i n g u i s h i n g f e a t u r e s n o t w i t h s t a n d i n g t h e u l t i m a te e f f e c t o f r e d e t e r m i n a t i o n o f t r u e i n c o m e u n d e r b o t h p r o v i s i o ns . A c o n j o i n t r e a d i n g o f S . 1 5 3 C & S . 1 4 7 w o u l d s h o w t h a t t h e n a tu r e o f p o w e r o f r e o p e n i n g a s s e s s m e n t u n d e r s e c t i o n 1 4 7 i s m a t e r i a l ly d i f f e r e n t f r o m t h a t o f t h e p o w e r c o n f e r r e d u n d e r S .1 5 3 C . S e c t i o n 15 3 A / S . 1 5 3 C a r e s p e c i a l p ro v i s i o n s d e a l i n g e x c l u s i v e l y s e a r c h c a s e s w h i l e S . 1 4 7 i s a p p l i c a b l e t o a l l t y p e s o f e s c a p e m e n t i n c l u d i n g i n co m e u n e a r t h e d i n s e a r c h p ro c e e d i n g s . T h e p o w e r a v a i l a b l e u n d e r S . 1 53 C d o e s n o t r e n d e r p r o v i s i o n o f S . 1 4 7 re p u g n a n t p e r s e . T h e r e m e d y av a i l a b l e u n d e r S . 1 5 3 C a n d S . 1 4 7 a r e a l s o n o t i n c o n s i s t e n t . R e l e v a nt h e r e t o n o t e t h e o b s e r v a t i o n o f t h e H o n ' b l e B o m b a y H i g h C o u r t i n t h e c a s e o f S h i r i s h M a d h u k a r D a l v i 2 8 7 I T R 2 4 2 ( B o m . ) ; S e c t i o n 1 4 8 i s a s u b s t a n t i v e p r o v i s i o n w h e r e a s s e c t i o n 1 5 8 B C i s a p r o c e d u r a l s e ct i o n . B o t h s e c t i o n s d e f i n i t e l y s t a n d o n d i f f e r e n t f o o t i n g s . S e c t i o n 1 5 8BC a n d S . 1 5 3 C a r e a n a lo g o u s . T h e k e y v a r i a n c e s a r e f i r s t l y , n o n o b s t an t e c l a u s e i n S . 1 5 3 C g r a n t s n e a r l y s w e e p i n g p o w e r s t o r e v e n u e w i t h a l i be r t y t o s u m m a r i l y r e o p e n t h e a s s e s sm e n t o f 6 y e a r s w i t h o u t o b s e r v i n g s t r i n g e n t a n d I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 17 v a l u a b l e s a f e g u a r d o f ' r e a so n t o b e l i e v e ' s e t o u t in S . 1 4 7 o f t h e A c t . P r o v i s i o n s o f S . 1 5 3 C t h u s s o m e w h a t t o n e s d o w n t h e r i g o r s o f S . 1 4 7 in f a v o u r o f t h e R e v e n u e . S e c o n d l y , f o r u s u r p i n g j u r is d i c t i o n u n d e r S . 1 4 7 , t h e d o c u m e n t s / p a p e r s f o u n d i n t h e c o u r s e o f s e a r c h n e e d n o t ‘ b e l o n g t o ’ t h e p e r s o n o t h e r t h a n p e r s o n se a r c h e d . M e r e - d e m o n s t r a b l e c o n n e c t i o n o r l i v e l i n k t o s u c h t h i r d p e r s o n r e v e a li n g e s c a p e m e n t o f i n c o m e i s a d e q u a t e t o i n v o k e r e m e d y u n d e r S . 1 4 7 . Th i r d l y a n d s i g n i f i c a n t l y , o p e ra t i o n o f S e c t i o n 1 5 3 C i s d e p e n d en t o n t h e ' s a t i s f a c t i o n ' a r r i v e d b y t h e A O o f t h e s e a r c h e d p er s o n a t t h e f i r s t i n s t a n c e a n d n o t t h a t o f A O o f t h e p e r so n w h o s e i n co m e i s f o u n d t o h a v e e s c a p e d a s s e s s m e n t . I n t h e a b s e n c e o f s u c h ' s a t i s f ac t i o n ' a r r i v e d b y t h e A O o f t h e s e a r c h e d p e r s o n , t h e A O o f t h e t h i r d p a r ty / A s s e s s e e h e r e i n w o u l d b e r e n d e r e d p o w e r l e s s t o a s s e s s t r u e i n c o m e un d e r S . 1 5 3 C . I n c o n t r a s t , S e c t i o n 1 4 7 c a n b e i n v o k e d b y t h e A O o f th e A ss e s s e e i n d e p e n d e n t l y o n a r r i v i n g a t s a t i s f a c t i o n o f e s c a p em e n t o f i n c o m e f o r a g i v e n a s s e s s m e n t y e a r r e g a r d l e s s o f ‘ s a t i s f a c t i o n ’ o f A O o f s e a r c h e d p e r so n . T h u s , i t i s s e l f - e v i d e n t t h a t t w o s e c t i o n s o p e r a t e q u i t e d i f f e r e n t l y . T h e e f f e c t o f n o n o b s t a n t e c l a u s e u n d er S . 1 5 3 C i s t h a t p e n d i n g a s s e s s m e n t o r r e a s s e s s m e n t p r o c e e d i n g s s h a ll a b a t e . H e n c e , S . 1 4 7 w i l l b e r e n d e r e d i n o p e ra t i v e a n d w i l l g i v e w a y t o S e c t i o n 1 5 3 C o n c e p o w e r u n d e r S . 1 5 3 C a r e e x e r c i s e d v a l i d l y . T h is h o w e v e r i s n o t t h e s a m e th i n g t o sa y t h a t t h e r e i s a n y s t a t u t o r y c o m p ul s i o n t o r e s o r t o n l y t o m o d e p r e s c r i b e d u n d e r S . 1 5 3 A / S . 1 5 3 C i n t h e e ve n t o f s e a r c h . T h e s c h e m e o f A c t d o e s n o t s u g g e s t t h a t m e re s e a r c h a c ti o n r e v e a l i n g i n c r e m e n t i n g m a t e r i a l a g a i n s t t h e p e r so n o t h e r t h a n s e a r c h e d p e r s o n w o u l d a u t o m a t i c a l l y o u s t t h e p o w e r o f t h e A O o v e r th e a s s e s s e e c o n c e r n e d u n d e r S . 1 4 7 o f t h e A c t . T h e o v e r r i d i n g pr o v i s i o n s o f S . 1 5 3 C m e r e l y e n a b l e s t h e A O t o s e t a s i d e t h e p e n d i n g r e a sse s s m e n t p r o c e e d i n g s a n d g r a n t s p r i m a c y t o S e c t i o n 1 5 3 C o f th e A c t . A s n o t e d e a r l i e r , e x e r c i s e o f p o w e r u n d e r S . 1 5 3 C i s g o v e rn ed w i t h o u t a n y s t r i n g e n t f e t t e r s o f h o l d i n g ' r e a s o n t o b e l i e v e ' c on t e m p l a t e d u n d e r S . 1 4 7 . T h e r e f o r e , w h i l e e x e r c i s e o f o v e r r i d i n g p o w e r u n d e r S . 1 5 3 C w i l l r e n d e r S . 1 4 7 o t i o s e , t h e c o n v e r s e c a s e o f c l i p p i n g t h e p o w e r s a v a i l a b l e u n d e r S . 1 4 7 i n s e a r c h c a s e s p e r s e i s n o t f o u n d t o b e r e c o n c i l a b l e t o t h e s c h e m e o f t h e A c t . I n t h e l i g h t o f s c h e m e o f th e A c t n a r ra t e d a b o v e , w e a r e o f t h e v i e w t h a t t h e A O o f t h e a s s e s s e e (p e rs o n o t h e r t h a n s e a r c h e d p e r s o n ) c a n n o t b e c o m p e l l e d t o p u r s u e r e m ed y n e c e s s a r i l y u n d e r s . 1 5 3 C o f t h e A c t i n e x c l u s i o n t o r e m e d y a v ai l a b l e t o t h e A O u n d e r s . 1 4 7 o f t h e A c t . T h u s , o n t h i s c o u n t a l s o , t h e a c t i o n o f t h e AO u n d e r s . 1 4 7 o f t h e A c t i s w i t h i n t h e f o u r c o rn e r s of l a w a n d n o t b e f a u l t e d . 1 4 . 5 T h e d e c i s i o n s c i t e d o n b e h a l f o f t h e a s s e s s e e a r e c l e a r l y d i s t i n g u i s h a b l e a n d d o n o t r a i s e a n y c o n f l i c t w i t h p o s i t i o n o f l a w n a r r a t e d a b o v e . T h e d e c i s i o n r e n d e r e d b y t h e G u j a ra t H i g h C o u r t i n t h e c a s e o f C a rg o C l e a r i n g A g e n c y v s . J C I T [ 2 0 0 8] 30 7 I T R 1 ( G u j ) h a s I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 18 b e e n r e n d e r e d u n d e r a d i f f e r e n t s c h e m e f o r a s s e s s m en t o f s e a r c h c a s e s i . e . w i t h r e f e r e n c e t o b l o c k p e r i o d r e g i m e . T h e H on ’ b l e G u j a ra t H i g h C o u r t a l s o e c h o e s t h a t i n c a s e o f c o n f l i c t b e t w e e n t h e o p e r a t i o n o f e r s t w h i l e S e c t i o n 1 5 8 B C o f t h e A c t ( p e r t a i n i n g t o er s t w h i l e a s s e s s m e n t p r o c e d u r e i n t h e c a s e o f t h i r d p e r s o n u n d e r o l d s c he m e ) a n d S e c t i o n 1 4 7 /1 4 8 o f t h e A c t u n d e r n o r m a l p ro v i s i o n s , p ro v i s io n s o f e r s t w h i l e S e c t i o n 1 5 8 B C w i l l p re v a i l . T h e H o n ’ b l e G u j a r a t H ig h C o u r t h a s a l so o p i n e d t h a t p r o c e e d i n g s u n d e r s . 1 4 7 / 1 4 8 o f t h e A c t w i l l n o t l i e w h e r e i t i s r e p u g n a n t t o t h e p ro c e d u r e l a i d d o w n u n d e r e r s t wh i l e C h a p t e r X I V - B r e l a t i n g t o s e a r c h c a s e s . I n t h e i n s t a n t c a s e , w h er e t h e o n e r o u s p r o c e e d i n g s u n d e r s . 1 5 3 C o f t h e A c t h a s n o t b e e n in v o k e d a n d c o u ld n o t p o s s i b l y b e i n v o k e d , t h e r e w a s n o i m p e d i m e n t f or i n i t i a t i n g p r o c e e d i n g s u n d e r s. 1 4 7 o f t h e A c t b y t h e A O a s d i sc u s s e d i n e l a b o r a t i o n a b o v e . T h e r e f o r e , i n C a rg o C l e a r i n g A ge n c y a n d o t h e r d e c i s i o n s o f t h e c o - o r d i n a t e b e n c h c i t e d o n b e h a l f o f t h e a s s e s s e e r e n d e r e d o n s i m i l a r l i n e s d o n o t g i v e r i s e t o a n y co n f l i c t a n d a r e o f n o a s s i s t a n c e t o t h e a s s e ss e e . 1 4 . 6 C o n s e q u e n t l y , t h e s e c o n d a d d i t i o n a l g r o u n d i s a l s o d i s m i s s e d . 10. In the light of nuanced view expressed by the Co-ordinate Bench, we see little merit in the plea that exercise of powers under Section 147 runs contrary to provisions of Section 153C of the Act. The objections of the assessee thus merges is void. 11. It is further contended on behalf of the assessee that the reasons recorded under section 148(2) of the Act are marred with several inherent deficiencies which touches the assumption of jurisdiction. The assessee submits that the Assessing Officer has failed to apply his mind to the information made available to him by the Investigation Wing and also such material is not capable of providing inference for assumption of jurisdiction under section 147 of the Act. 12. On perusal of reasons recorded, we observe that based on information gathered in the course of search in the case of Jain and Choudary Group, a detailed and comprehensive information was supplied to the Assessing Officer herein. The Investigation Wing had relied upon the statement of various persons in the group search cases wherein it was categorically asserted that the supplier M/s. Kriya is not engaged in any real business and no physical goods were supplied by such entity to any party named in their books. The name of the assessee company figured in books of accounts and the assessee has shown to have obtained supply from such entity. These I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 19 incriminating facts have emerged in the reasons recorded. Therefore, the reasons recorded are specific in nature and reliable in character. It is trite that at the stage of issuance of notice, the Assessing Officer under section 147 is only required to hold a prima facie belief on the material available before him as long as such material is relevant. The Assessing Officer is entitled to invoke the jurisdiction under section 147 of the Act as long as the material are relevant and is capable of giving prima facie belief to a person instructed in law. This proposition has been laid down by the Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. vs. ITO (1999) 236 ITR 34 (SC). We further observe that Assessing Officer has applied his mind properly and has given his independent finding which fact is manifest from the bare reading of the reasons recorded. We thus see no substance in the arguments propped up on behalf of the assessee to assail the validity of assumption of jurisdiction. The challenge to assumption of jurisdiction thus fails. 13. We now turn to the aspects of merits of disallowance towards bogus purchase under challenge by the Revenue. As noted in the preceding paragraphs, a search and seizure operation under section 132 of the Act was conducted on 03.10.2013 on Rajender Jain Group and Dharmichand Jain Group who are stated to be entry operators stationed at Mumbai and indulging in providing accommodation entries in the nature of bogus sales and unsecured loans etc. to various beneficiaries. During the course of search, the statement of various persons were recorded including Shri Rajendra Jain, Shri Sanjay Choudhary and Shri Dharmichand Jain and these persons are stated to have admitted that they are only providing accommodation entries through several entities/concerns in the garb of sales/unsecured loan to various parties. They have categorically admitted that they are not doing any real business and are only providing accommodation entries. The search action further resulted in collection of evidences and other findings which provide the foundation that through web of concerns run and operated by them, the group was engaged in providing accommodation entries of various nature like including bogus bills for non-existing supply of material. The Directors/proprietors of this group admitted that they were merely dummy directors/proprietors and used to sign different papers for nominal consideration without any actual work done at their end. Money received against such bogus sale were through Banking Channel and same was refunded to beneficiaries after deducting commission I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 20 for providing bogus accommodation entries. In such backdrop, the Assessing Officer reopened the assessment and made an addition of Rs.65,20,152/- on account of supply by one M/s. Kriya Impex Pvt. Ltd. which is found to be associate concern of the searched group. The matter was confronted to the assessee in the course of scrutiny assessment. On considering all the evidences furnished such as invoice, payment through banking channels, copy of stock register etc., the AO observed that mere reflection of transactions in the ledger books and payment through banking channel does not satisfy the claim. The statement of the Director of concerns were recorded on oath under the provisions of the Act which proves the true nature of the transactions to be an accommodation entry. A reference was made to the Judgement delivered by the Hon’ble Delhi High Court in the case of CIT vs. La Medica (2001) 250 ITR 575 and section 37 of the Act was invoked to disallow the purchases valued at Rs.65,20,152/- after rejecting the books of accounts. Concurrently, the AO also invoked provisions of section 69C of the Act as the purchase to the extent of the aforesaid amount remains unverifiable. Eventually, the total turnover of the assessee was substituted by the Assessing Officer at Rs.14.5 crores and net profit was taken at Rs.3.0305 crores as against the turnover declared as per profit and loss accounts at Rs.13.34 crores and taxable income declared at Rs.93.61 lacs. 14. In first appeal, the CIT(A) granted partial relief and restricted the addition at Rs.3,26,008/- being 5% of the disputed purchases amounting to Rs.65,20,152/-. The relevant operative para of the order of CIT(A) granting relief is reproduced hereunder: “5. Ground no. 2 of the appeal is related to the addition made u/s 69C of the Act on account of bogus purchases. 5.1 The brief facts of the case are that the appellant is engaged in the business of manufacturing and sale of jewellery. As stated above, the AO had received information from the investigation wing of the Department, as per which the appellant has received accommodation entry of Rs. 65,20,150/- from a party namely M/s Kriya Impex Pvt. Ltd. which is a concern of the entry operator group of Sh. Rajendra Jain, in whose case a search action u/s 132 of the Act was carried out by the Department. The AO called for the details of these purchases and the appellant submitted that the purchases from this concern were genuine and furnished the stock statement, purchase bills and corresponding sale bills. It was also submitted that the appellant had made payments to the said concern through banking channels. The appellant also furnished affidavits from the parties in which the sale & delivery of goods to the appellant was confirmed. I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 21 However, the AO relied upon the information provided by the Investigation Wing and considered that the appellant has shown bogus purchases of Rs. 65,20,152/- and has made the addition. 5.2 I have gone through the complete facts of the case and the submission made by the AR. It is noticed that the main contentions of the appellant are as under: i. During the course of assessment proceedings, the appellant had denied the fact that it had made bogus purchases and had produced the invoice vouchers and the copy of the bank account from which the payments were made through banking channels to the parties. ii. The appellant had also stated that it is engaged in the business of manufacture & trading of jewellery. The items purchased from the concern were either consumed or were reflected in the closing stock declared by the appellant. iii. The appellant had also stated that it is maintaining proper stock register and the entry of purchase and sale of items has been duly recorded in this register. iv. In addition, the appellant has contended that the request of the appellant made vide letter dated 22.09.2017 filed on 26.09.2017 before the AO, to provide an opportunity to cross examine the persons whose statements were being used against it, was not adhered to by the AO. v. The appellant has further submitted that it has produced confirmations from the supplier parties which shows that the appellant has made genuine purchases. vi. The appellant has also submitted that the total sales as well as the quantitative stock tally furnished to the AO have not been disputed by the AO. vii. The AO has not furnished the copies of the documents/evidence seized from third party and the same was used against the appellant without confronting it with the same. viii. The AO had made independent enquiry u/s 133(6) of the Act and no adverse finding has been brought on record by the AO. ix. It is also submitted that on similar grounds and reasons, the case of the appellant was reopened u/s 147 of the Act for AYS 2008-09 & 2009-10 and under similar circumstances, the AO had made the addition on account of suppressed GP @ 4.38% and 4.18% respectively. 5.2.1 From the above discussion and facts, it is observed that the AO finalized the assessment without gathering any corroborative evidence to support the information provided by the investigation wing. The AO also failed to provide natural justice to the appellant by not giving the opportunity to cross examine the persons whose statements have been used by the AO for making the addition. It is an established law that any I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 22 statement recorded behind the back of the assessee cannot be used against it without confronting the assessee with that statement. The appellant has relied upon a number of case laws which are relevant to the case and are in favour of the appellant. In the case of Tristar Jewellary Exports Pvt. Ltd. vs. DCIT in ITA No. 7593/M/11, vide order dated 31.08.2015, the Hon'ble Mumbai ITAT has held as under: "9 It remains undisputed that the assessee was never provided any opportunity to cross examine Sh. Hitesn L Rawal, though he specifically asked for such cross examination. On the other hand, the burden was sought to be shifted on the assessee by the AO, by asking him to produce Sh. Rawal, even though it was the AO who had relied on the statement of Sh Rawal, without either confronting this statement to the assessee, or providing opportunity to the assessee to cross examine Sh. Rawal. Therefore, the reassessment order is as a result of violation of the natural principle of audi alterm partem. A statement recorded at the back of a party cannot be used against such party without confronting such statement to the party. Hence, on this score alone, the reassessment order is unsustainable in the eye of law and we hereby cancel the same. As a consequence, the order of the Id. CITYA) is also cancelled in toto," In this case, the AO has not furnished the copies of the documents/evidence seized from third party and the same was used against the appellant without confronting her with the same. Also, no opportunity has been provided to cross- examine the persons whose statements have been relied against the appellant by the AO. Reference is made to the decision of Delhi High Court in the case of CIT vs. Anil Khandelwal (ITA Appeal No. 247/2015 & ITA 248/2015), in which it has been held that addition made merely on the basis of statement of the third party without any corroborative evidence is not tenable and the presumption u/s 132(4A)/292C is available only in the case of the person from whose possession and control the documents are found and it is not available in respect of a third party. 5.2.2 Even otherwise, the appellant has been able to prove the genuineness of the purchases under consideration and the AO has not been able to corroborate the information received from investigation wing with any evidence to rebut the contentions of the appellant made at the time of assessment. 5.3 In view of the above facts and in consistence with the stand taken by the AO for the AYS 2008-09 & 2009-10, I am of the view that the addition made needs to be restricted to the additional gross profit earned by the appellant in respect of the purchases shown to have been made from M/s Kriya Impex Pvt. Ltd. In the absence of the details pertaining to the sale consideration received by the appellant on sale of items manufactured by use of the disputed items of purchase and the actual profit earned from the same, the additional gross profit earned by the appellant is estimated at 5% of the disputed purchases amounting to Rs. 65,20,152/- which works out to Rs. 3,26,008/-. Thus, the addition made by the AO is restricted to Rs 3,26,008/ As a result, the ground of appeal is partly allowed. I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 23 6. Ground nos. 3 & 4 of the appeal are with respect to the rejection of books of account by the AO u/s 145(3) of the Act and estimating the turnover and net profit of the business. 6.1 The AO has also rejected the books of account of the appellant and has estimated the total turnover at Rs. 14.50 crores as against the turnover of Rs. 13,34,33,025/- shown by the appellant. The AO has also estimated the net profit at Rs. 3,03,05,000/- as against the net profit of Rs. 92,52,710/- shown by the appellant. The reasons stated by the AO for rejecting the books of account are as under: “16. Reasons for rejecting books of account 1 Statements of entry operators and other circumstantial information received amply prove that the purchases made by the assessee are bogus in nature. 2 Bogus purchases shows that the books of account do not represent the true and correct picture of financials or state of affairs of the business earned on by the assessee. 3 From the bogus purchase balls the following observations are made: a. the number of diamonds are not specified clearly in the bills b. There are no details regarding size, carat (weight) of the diamonds purchased c. There are no details regarding Quality and specifications Such as cut, colour, polish, clarity inclusions etc. d. The bills have only gross weight m carats and a particular weight has been applied for all the diamonds which are shown in carat. Such a situation cannot be accepted as the assesses has claimed the very high carat of 102. 19 and 132.74 carat, which is not claimed to be a single diamond, but are claimed to be several diamonds and hence if there was any genuineness in the purchase the specific details of each of the various diamonds would have been given along with the specific rates, However, the bill does not give proper details and it is apparent that the bills have been drawn up merely to claim bogus purchase of diamonds. e. The assesses has claimed that the diamond so purchased from M/s Kriya sold/included transaction manufacturing jewellery and were further However, once It is the assesses and clear that that it no had genuine taken view of the nature of the claimed by accommodation entries and further in purchase and invoice, it is dear that no genuine purchase of diamond was made by the assesses in respect of the above transaction with M/s Kriya Impex Put. Ltd. From this clear that the is making non-existing diamonds, for which only bogus purchase bills the assessee, were used in this sock manufacturing of jewellery and safe by the assessee of the a claim were or where taken by in transactions claimed by the assesses and books of account of the assessee are not reliable and hence are liable to be rejected. the proves that the was made in the stock. I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 24 f. Once the diamonds were actually not purchased and were non-existent then the claim of the that these diamonds were manufacturing of Jewellery, stocking and subsequent sales are us'd in not reliable being a wrong claim. In view of the bogus purchases claimed by the assesses, which is clear from the statement of Sh. Rajendra Jain as discussed in preceding paras, and also based on discussion regarding the purchase bills, are it is clear that the purchases made and claimed by the unreliable and deserves to be rejected. Even though the assesses is engaged in the business of selling jewellery and earning profits there from, the profits disclosed for the impugned year are (suppressed due to bogus/inflated billing] in comparison very low the profits to prevalent in this line of business. g. As the sales, purchases and stocks of the assesses cannot be relied upon, particularly as books of accounts are inaccurate and co not present the true and particularly as books of account are hereby rejected. h. The addition made in respect of bogus purchases above is deemed to be telescoped here before arriving at the net profits after rejecting books." 6.2 A perusal of the assessment order shows that the AO has rejected the books of account by holding that the same are not reliable and the purchase bills do not reflect the complete details of the diamonds purchased. By rejecting the books of account, the AO has estimated the turnover and the net profit without giving any reason or basis of the estimate made by him. The AR has contended that the appellant has maintained the consistent method of accounting for the past many years and the same has been accepted by the Department but the AO has rejected the books of account during this year on flimsy grounds. It is observed that the AO has taken this decision by stating that the purchase bills do not contain specific details like the number of diamonds, size, carat, quality, color, polish, inclusions etc. In this regard, it is pointed out that the appellant is maintaining proper stock register and the diamonds are purchased in bulk lot wise) and as per the trade practice, all these details are not mentioned by the supplier in the invoices. If books are to be rejected based on this reason, it will result in rejection of books in almost all the cases be it related to purchase of fabric, spare parts, machine tools, jewellery, hosiery, scrap, metals, etc. In my view, books of account can be treated as reliable if the books along with the other supporting documents give the true picture of the statement of affairs of the business. In this case, the ledger accounts, stock statement, invoices, VAT Returns, confirmation from the party, bank statement etc. are sufficient to establish the reliability of the books of account. The AO has neither given proper reasons for rejecting the books of account nor has given any rationale for estimating the turnover and the net profit. In view of these facts, I am constrained to delete the addition made by the AO by rejecting the books of account. Accordingly, the grounds of appeal are allowed.” 15. The Revenue is in appeal before ITAT against the conclusion drawn by the CIT(A) which has resulted in substantial relief to the assessee. I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 25 16. The ld. DR for the Revenue broadly relied upon the observations made by the Assessing Officer and contended that the CIT(A) was not justified in granting relief and restricting the additions @ 5% of the purchases on the face of such detection of the large scale racket causing serious harm to the interest of the Revenue by falsification of books and inclusion of such bogus bills. The learned DR submitted that the AO was fully justified in rejecting the books of accounts on the face of introduction of bogus purchase bills obtained by the assessee from Kriya in the instant AY 2011-12 and from two parties of the same searched group including Kriya in other year A.Y. 2010-11. The ld. DR referred to the judgment delivered by the Hon’ble Delhi High Court in the case of Action Electricals vs. DCIT, 258 ITR 188 (Delhi) to support the case of the Revenue that Section 145(2) duly empowers the Revenue to make a best judgment assessment when he has not satisfied about the correctness or completeness of the accounts of the assessee. It was submitted that the Hon’ble Delhi High Court has observed that it is not possible to categorize various types of defects which may render rejection of books of accounts of assessee on the ground that accounts are not complete or correct. Each case has to be considered on its own peculiar facts, having regard to the nature of business. The ld. DR pointed that introduction of false purchase bills in its books of accounts makes the assessee culpable and book results cannot be correctly ascertained in such circumstances. The rejection of books were thus warranted as rightly done by Assessing Officer. The ld. counsel also pointed out that in the present case, the bill from ‘Kriya’ shows a supply of cut and polished diamonds of heavy weight (102.19 CTS and 132.74 CTS), the correct value of which was found to be Rs.65,20,152/- by Investigation team. The Learned DR contended that the bill prepared is very non-descript and cursory and the diamond weight is of very premium quality. It is not known as to how and to whom the diamonds have been sold by the assessee. The corresponding party to whom such diamonds have been sold which were allegedly acquired from Kriya is not identifiable. The ld. DR also pointed out that keeping in mind the size of the diamonds, it is very easy to manipulate information on the mode of supply except for the payment through banking channel which too was made after a considerable gap from the date of such bill. There is no concrete reason to disregard the categorical statement of the suppliers towards accommodation entry. The ld. DR also contended that in such cases, it is not possible for the department to get hold of any clinching proof towards execution of transactions and such act needs to be viewed contextually in a holistic manner keeping I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 26 in mind such gross circumstances existing in such cases. The ld. DR thus submitted that there was no justification for CIT(A) to casually restrict the addition to the extent of 5% of such bogus purchases and brushing aside the findings of such large scale search and investigation operation. 17. The ld. DR next submitted that the order of CIT(A) is laconic and a summary order has been passed casually without dealing with the relevant observations of the Assessing Officer. Vital evidences have not been looked into by the CIT(A) while granting large scale relief to the assessee in a nonchalant manner. Thus, the ld. DR submitted that the CIT(A) has neither examined the facts incisively nor any opportunity was given to the AO by way of remand. The CIT(A) has inter alia observed that the opportunity to cross examining the persons whose statement has been used by the AO for making additions have not been provided. The CIT(A) was thus considerably influenced by cross examination not offered. The Learned DR pointed out that requirement of cross examination is not absolute and can be dispensed with in appropriate circumstances. Having reopened the case based on cogent evidences and re- assessment proceedings set in motion, the onus was upon the assessee to justify the bonafides of purchases recorded in the books by production of the parties and other appropriate evidences. A mere rebuttal of the statement of the supplier or retraction thereon by the supplier at a belated stage is of no consequences in law. The onus was upon the assessee to produce evidences in rebuttal by bringing the party before the AO. The primary onus has not been discharged in this case and the onus has been wrongly shifted by CIT(A) on the AO. The CIT(A) has also adopted suppressed GP percentage of the bogus purchases without verifying as to whether the diamond purchase has been actually sold and sales have been recorded against impugned purchase. The assessee has not provided any link between the purchase and corresponding sale in the stock register and mere entry in the computerized stock register will not validate the arguments of the assessee. The CIT(A) has only found fault with the action of the AO without initiating any enquiry thereafter on his own or causing such enquiry through AO. The relief granted by the CIT(A) thus is without any legal foundation. 18. On being enquired by the Bench, about the correctness of figure of Rs.65,20,152/- as against the purchase value as per bills at Rs.25,12,590/-, the ld. DR I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 27 submitted that Rs.65,20,152/- represents the real value of the diamonds specified in purchase bill, which has been adopted in place of underpriced value of Rs.25,12,590/- shown by the assessee. On being further asked by the Bench, the ld. DR drew blank on the reason for adopting a different turnover at 14.50 crores as against Rs.13.34 crores declared by the assessee. The ld. DR also failed to explain the purport of assessment of Rs.3,03,05,000/- as taxable income instead of Rs.93,61,190/- declared by the assessee followed with increase on account of additions proposed thereon by the AO himself at Rs.65,20,152/-. The assessed income thus could possibly be Rs.1,58,81,342/- only instead of Rs.3,03,05,000/- 19. In conclusion, the Learned DR pointed out that the order of the CIT(A) granting substantial relief deviates from the role and duly cast upon the CIT(A). It is trite that powers of CIT(A) co-terminus with that of the AO only with appellate functions entrusted to him. The CIT(A) has merely found lacuna in the order of the AO without giving opportunity to the AO and without observing co-terminus duty cast upon him in law. The Learned DR thus submitted that the order of the CIT(A) requires to be set aside and order of the AO requires to be restored. 20. Per contra, ld. AR for the assessee strongly assailed the action of the AO on merits. The ld. AR submitted that the books have been causally rejected without pointing specific defects. A turnover of different figure has been adopted without giving any reason for doing so. Likewise, profits have been taken at Rs.3.03 crores without any reasons for doing so and profits have been based on some unintelligible assumptions and surmises. The ld. AR also pointed out that CIT(A) was also not justified in adopting the unauthentic figure of Rs.65,20,152/- instead of the correct figure of Rs.25 lac for the purpose of estimations of 5% profits thereon. 21. We have carefully considered the rival submissions and perused the assessment order and the first appellate order. The matter referred to and relied upon in the course of hearing and also the case law cited have been perused. 22. The correctness of addition on account of bogus purchases is in question. The issue is essentially factual in nature. The AO for the Assessment Year 2011-12 in I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 28 question alleged that the assessee has procured bogus bills from alleged supplier M/s. Kriya Impex Pvt. Ltd. in order to inflate the purchase costs and reduce taxable income. The total value of transaction as per so called bogus purchase bills raised stands at Rs.25,12,590/- whereas the AO has alleged that the real value of purchase transaction is Rs.65,20,152/- based on report from Investigation Wing. The AO alleged that the transaction towards diamond trade has been inserted in the books without any delivery and transactions are essentially paper transactions. The addition of Rs.65,20,152/- was thus made by the AO on account of bogus purchases. 23. The CIT(A), in the first appeal, however examined the circumstances afresh and the documentary evidences and estimated 5% of the disputed purchases amounting to Rs.65,20,152/- which worked out to Rs.3,26,008/- as estimated addition on account of bogus purchases. The CIT(A) observed that in the absence of cogent details pertaining to the sale transaction and consideration amount by the assessee on sale of items, the additional gross profit earned by the assessee requires to be estimated at 5% of the disputed purchase value amounting to Rs.65,20,152/-. The addition made by the AO was thus restricted to Rs.3,26,008/-. 24. In the facts and circumstances of the case, where the parties to whom the purchase of diamonds in question have been sold, is not known, one cannot say that the onus which lay upon the assessee has been fully discharged. The bona fides of the supplier Kriya Impex Pvt. Ltd. has been put under serious question by the Investigation Wing. The corresponding purchases of the so called supply made by Kriya Impex Pvt. Ltd. is also not known. Therefore, the action of the CIT(A) in resorting to some reasonable estimation based on the value of diamond stated to have been purchased from Kriya Impex Pvt. Ltd. is quite justified. Without reiteration of reasonings of CIT(A), we see no error in the action of the CIT(A). Hence, the appeal of the Revenue as well as Cross Objection of the assessee challenging the action of the CIT(A) towards estimated additions deserves to be dismissed. 25. In the result, the appeal of the Revenue as well as Cross Objection of the assessee is dismissed. I.T.A. Nos.7754 & 7755/Del/2018 CO Nos.15 & 16/Del/2023 29 26. The facts and issues are identical in Assessment Year 2010-11 concerning ITA No.7754/Del/2018 (Revenue’s Appeal) and Cross Objection No.15/Del/2023 filed by the assessee except variation in the amount and inclusion of one more party which is alleged to be accommodation entry provider namely Kailash Enterprises along with Kriya Impex Pvt. Ltd. 27. In view of similarity of facts, the delineations made in ITA No.7755/Del/2023 and Cross Objection No.16/Del/2018 thereon concerning Assessment Year 2011-12 shall apply mutatis mutandis. Consequently, the additions / disallowances on account of bogus purchases estimated by the CIT(A) does not call for any interference. 28. In the result, both the appeals of the Revenue as well as Cross Objections of the assessee are dismissed. Order pronounced in the open Court on 29/02/2024 Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /02/2024 Prabhat