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TMI Blog2018 (1) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. This assessee is stated to be a company granting loan an advances as well as commission agents etc. It filed its return on 331.03.2009 stating total income of Rs.4,528/-. The Assessing Officer framed regular assessment in its case on 31.12.2007 assessing the above stated income of Rs.48,234/-. He thereafter termed reasons to believe that the assessee's taxable income liable to be assessed had escaped assessment for the sole reason that the DIT(Inv)-11 Delhi latter dated 15.03.2013 had indicated it having taken accommodation entries from one Shri Surendra Kumar Jain to the tune of Rs.1.25 lac. The same culminated in the impugned re-assessment framed on 25.03.2014 leading to sec. 68 addition of unexplained cash credits amounting to Rs. 1.25 lac. 4. The assessee preferred appeal. The CIT(A) has enhanced the above stated income to the tune of Rs. 18 lac after adding share application money to be lacking genuineness of the investor parties. It is in this backdrop of facts that assessee has filed the instant appeal. 5. I have given my thoughtful consideration to rival contention. Both parties reiterate their respective stands against and in support of the lower authorities' action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same have been shown by the assessee in Schedule -7 of its balance sheet under Current Liability & Provisions. It is also evident from the records that the assessee had neither provide any details of the said share application money nor explained the source of the aid fund. In view of the above n absence of proper explanation on the part of the assessee, there was no alternative for the AO but to add the said amount of Rs. 1,25,000/- under the provision of section 68 of the Income Tax Act, which was found by the DIT(Inv.), New Delhi as an accommodation entry obtained by the assessee from the above mentioned group on account of search conducted in the case of Shri Surendra Kumar Jain Group. The A/R of the appellant has made following rejoinder to the remand report of the AO to this issue. Moreover, in the original assessment u/s. 143(3)/153(B)(i)(b) for the above assessment year, it has been categorically mentioned that all the transactions were explained and any unrecorded/unaccounted transactions if any, were assessed in the hands of Sri Anand Sharma. Decision: The issue raised in this ground is regarding the addition made by the AO on account of unexplained cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2013 showing a total income of Rs. 3,55,512/-. The said return was accepted and an intimation u/s 143(1) of the Income Tax Ac6t, 1961 (Act) was issued. Subsequently the assessment was reopened by a notice issued u/s 148 of the Act dated 27.03.2015 for making a re-assessment u/s 147 of the Act. The reasons recorded by the AO before issuing a notice u/s 148 of the Act reads as follows :- "23/03/2015 It appears from the record that the assessee filed his return of income for the Assessment Year 2012-13 on 17/02/2013 declaring total income at Rs. 3,55,512/. The return of the assessee was processed on 21/03/2013. ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 Information has been received from DIT (Inv.)-II, Mumbai that the assessee during the financial year 2011-12 had availed of entries of bogus purchases amounting to Rs. 14,55,472/-from a concern M/s. Nice Diamonds of Mumbai. The above information has been received consequent to the search & seizure operation conducted in the case of Bhanwarlal Jain group of cases. A search & Seizure operation on the above mentioned group was conducted on 03.10.2013. As a result of the said search and follow - up investigation, it came to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing bogus purchases. Such opportunity of cross examination was not provided and the AO proceeded to rely on the statement recorded by D.I.T. (Investigation),-II, Mumbai. 5. In the course of search of Bhanwarlal Jain the AO was of the view that since investment in diamonds was shown in the balance sheet and the same must have been acquired from some other parties and since the details of such purchases were not furnished the investment should be treated as unexplained and added to the total income of the assessee. The AO accordingly made addition of Rs. 14,55,472/- on account of unexplained purchase from Nice Diamonds. 6. Apart from the above the AO also treated the long term capital gain which were declared by the assessee in the return of income on account of sale of shares as bogus and ultimately determined the total income of the assesee as follows :- Rs. Rs. Returned Income 3,55,512 Add : Purchase from unaccounted source [as discussed] 14,55,472 Add: Unexplained cash credit [as discussed] 41,38,799 Total Income 59,49,783 7. It may be seen from the above additions made by the AO that the long term capital gain which was treated as bogus viz. Rs. 41, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the initiation of proceedings u/s. 147 when the AO did not apply his own mind and examined the records of the assessee since the assessee never claimed the sum of Rs. 14,55,472/ - as deduction in any manner while computing the total income and as such there was no escapement of income. 4. For that the Ld. CLT(A) erred in confirming the initiation of proceedings u/s.147 which were bad in law since it was not the case 01 the AO that the purchase was not disclosed in the books or that the payment made 10r such purchase was not explained and thus there was no question of any income or escapement of income. 5. For that the Ld. CI.T (A) erred in confirming the addition of Rs. 14,55,472/- as purchased from unaccounted sources when payment for such purchases was made by account payee cheque for which bank statement was produced, there was no evidence of any other payment and no deduction was claimed as the source of the purchase was duly proved and there was no evidence that he assessee earlier purchased the diamonds by paying cash money. 6. For that the Ld. C.I.T(A) erred in confirming the addition of Rs. 41,17,365/- as unexplained cash credit U/s. 68 when there is nothin8 on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d search and investigation conducted, it came to light that Bhawarlal Jain group was providing bogus/accommodation entries to several persons and entities and these entries were bogus entries. Nice Diamonds is one of the entities belonging to Bhawarlal Jain Group of cases. Since the assessee claimed to have made purchases from Nice Diamonds, the assessment in the case the assessee was reopened u/s 147 of the Income Tax Act, 1961 (Act.). ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 14. In the assessments concluded, the AO after making reference to all the evidences filed by the assessee to prove the source of funds as well as evidence of payments and came to the conclusion that the purchases in question were not genuine. Ultimately the AO made an addition in the case of the Assessee by observing that since the assessee in the balance sheet has shown increase in jewelry there is no evidence on record to doubt that he didn't make any purchase in the FY-2011-12 but the purchases were made by the Assessee from some other party in earlier year but the assessee has not furnished the details of the same. Accordingly, expenditure incurred towards purchase of diamonds shown as jewe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reopened for one reason but no addition is made in the reassessment proceedings in respect of that reason or when the said addition is deleted, then, no further addition can be made in the reassessment proceedings. In this regard ld. Counsel for the assessee placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Jet Airways India Ltd., 331 ITR 326 (Bom), wherein the Hon'ble Bombay High Court held that if AO does not assess income for which reasons were recorded u/s 147 of the Act, he cannot assess other income u/s 147 of the Act. The Hon'ble Court observed that (i) S. 147 provides that the AO may assess the income which has escaped assessment "and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section". Explanation 3 to s. 147 inserted by F (No. 2) Act, 2009 w.r.e.f 1.4.1989 provides that the AO "may assess or reassess the income in respect of any issue ... notwithstanding the reasons for such issue have not been included in the reasons recorded ..." ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 9 (ii) The words "and also" indicate tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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