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TMI Blog2020 (9) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. AO without any verification of any of the details submitted by the assessee and even without verification from the concerned seller 'M/s. Nazar Impex Pvt. Ltd.' made the additions without application of mind merely on the basis of the some investigation report from the Director General (Investigation), Mumbai which on stand-alone basis without corroboration with any of the facts of the case of the assessee cannot be made the sole basis to hold that the assessee had made bogus purchases. Assessee has demonstrated that if the alleged bogus purchases and corresponding sales are ignored or excluded, there will be a resultant loss of ₹ 20,16,844/- and under the circumstances, it cannot be said that the assessee had booked bogus purchases to reduce the profits. When the sales have been admitted and there is sufficient profit shown by the assessee on such sales and even without any iota of evidence on the file that the assessee was indulged in bogus purchases, the lower authorities were not justified in making/confirming the impugned additions. Moreover, no defect has been pointed out in the books of account of the assessee and even the books of account hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet of the assessment proceedings, which is placed at pages 7 to 10 of the paper book. 6. We have gone through the said order sheet entries and find that there is no mention in any of the orders of the Assessing Officer of different dates relating to the assessment proceedings carried out in the case of the assessee of issuance of any notice u/s. 143(2) of the Income Tax Act. 7. The Ld. DR, after perusal of the record has fairly agreed that in this case no notice u/s. 143 (2) was issued by the Assessing Officer to the assessee either before or during the framing of the assessment u/s. 143(3) of the Act. The Ld. Counsel for the assessee has submitted that the issue is very well settled on this point that even to assume jurisdiction by the Assessing Officer to frame reassessment u/s. 143(3) read with section 147 of the Act, statutory notice u/s. 143(2) is mandatorily required to be issued. The Ld. Counsel in this respect has made the following submissions:- Ground of appeal No. Assessing Officer s Findings CIT( A) s Findings AR submissions. 1. That the Hon,ble CIT(A)-5 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Assessing officer, which was made without issue of notice u/s 143(2) of the Act. 8. The Ld. DR, on the other hand, has relied upon the provisions of section 292BB of the Act to submit that if the assessee has not raised any objection of service of notice, appeared in any proceedings or cooperated in an enquiry relating to the assessment or re-assessment and no objection has been raised regarding the service of notice upon him, such assessee is precluded from taking any objection in this respect at a later stage. The Ld. DR in this respect has also relied upon the decision of the Hon'ble Punjab Haryana High Court in the case of 'Josh Builders and Developer (P) Ltd. vs. PCIT' (2016) 389 ITR 314 (P H). 9. In rebuttal, the Ld. AR of the assessee has submitted that the case law relied upon by the Revenue of Hon'ble High Court of Punjab Haryana in the case of 'Josh Builders Developers (P') Ltd. vs. PCIT' (supra) is regarding the validity and service of notice issued u/s. 143(2) of the Act, while in the present case there is complete absence of notice u/s. 143(2) i.e. no notice was issued at all eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 ITR 448 (Delhi), wherein, the Hon'ble Delhi High Court held that the failure of the Assessing Officer to issue a notice to the assessee u/s. 143(2) of the Act subsequent to the filing of the return pursuant to the notice issued u/s. 148 of the Act is fatal of the order of the re-assessment. In view of this, the assessment/re-assessment framed by the Assessing Officer u/s. 143(3) of the Act read with section 147 of the Act is liable to be quashed. We order accordingly. In view of this, the consequential addition pursuant to such invalid assessment framed will have no legs to stand and are accordingly ordered to be deleted. 11. In view of our findings given above on the legal issue, the grounds taken by the assessee on merits have become academic in nature. However, for the sake of completeness, the grounds on merits are also dealt with. 12. Ground Nos. 2 3: Vide ground Nos. 2 3, the assessee has agitated the confirmation of addition of ₹ 1,28,996/- on account of GP rate applied on alleged bogus purchases and further, the enhancement to the addition by the CIT(A) of ₹ 21,49,920/- pleading that such an addition was not warranted as neither any defect in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... io 42 ; if purchase of diamonds excluded from purchases as well as stock in trade, it results to loss of ₹ 20,16,844/-, cannot be said that assessee made efforts to reduce the profit. - Hon'ble Apex Court in the case of the addition to ₹ 2149920/-, which is against the law and facts. verified whether the diamonds shown as purchased from Nazar Impex were included in the stock and only those particular items have been sold and included in sales declared by the assessee. Para 4.2,19;h line from top of the page no.14; As the assessee has debited the amount of purchase from Nazar Impex in the trading account this has led to suppression of the profit to the extent of bogus purchases. PCIT vs. Tejua Rohit kumar Kapadia (PB folio 3 to 6) held; in para 3, the purchases were duly supported by bills and payment were made by account payee cheque, conformation of transactions, no evidence that the amount was recycled back to assesssee, particularly trader had also shown sales out of purchases made, which were accepted by Revenue. No question of law arises. -Confirmation u/s 133(6) is placed at PB folio 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings and are on record:- (i) Detail enclosed with reply dt 12.09.2013. (ii) Diamond Purchase Ledger. (iii) Diamond Sale Ledger. (iv) Diamond Trading A/c. (v) Diamond Stock Register. (vi) Valuation report dt. 14.03.2012. 15. A perusal of the above details along with documents attached with the paper book reveals that the assessee has submitted the complete particulars of purchase/sales, item-wise quantitative details, stock register, trading account of diamond and date wise movement of diamond. The details noted above were also submitted during the reassessment proceedings. From the above, it is duly proved that the entire details were submitted by the assessee. The Assessing Officer without any verification of any of the details submitted by the assessee and even without verification from the concerned seller 'M/s. Nazar Impex Pvt. Ltd.' made the additions without application of mind merely on the basis of the some investigation report from the Director General (Investigation), Mumbai which on stand-alone basis without corroboration with any of the facts of the case of the assessee cannot be made the sole basis to hold that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pening of assessment under section 147 of the Income Tax Act, 1961. 5. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. ITA No. 399/Chd/2019 (A.Y. 2010-11):- 1. That the Hon'ble CIT (A)-5 has erred in rejecting the additional ground of appeal that the reassessment is liable to be quashed on the ground that the statutory notice u/s. 143(2) was not served on the assessee. 2. That the Hon'ble CIT (A)-5 has erred in rejecting the additional ground of appeal that the addition has been made by the AO without rejecting the books of account u/s. 145(3) of the Income Tax Act, 1961. 3. That the Hon'ble CIT (A)-5 has erred in confirming the addition of ₹ 420392/- on account of G.P. on so called Bogus Purchases for ₹ 7006529/- and further enhancing the addition to ₹ 7006529/-, which is against the law and facts. 4. That the Hon'ble CIT (A)-5 has erred in dismissing the plea of the assessee for quashing the reopening of assessment under section 147 of the Income Tax Act, 1961. 5. That the Appellant craves leave to add or amend the grounds of appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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