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TMI Blog2022 (4) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... count payee cheque and the same goods were subsequently sold and quantity is tallied and the addition was made without providing any opportunity of cross examination, without any corroborative evidence and without providing copy of statements relied upon. 3. The appellant craves leave to add, alter or delete all or modify any or all the above grounds of appeal." 2. Brief facts of the case are that the assessee is engaged in the business of import, export and trading of cut and polish and rough diamonds. The assessee filed his return of income for Assessment Year 2008-09 declaring total income at Rs. 2,20,980/- on 01.08.2008. The case of assessee was reopened under section 147 of the Act. Notice under section 148 of the Act was issued on 10.03.2015 served on through speed post. 3. The case was reopened on the basis of information received from DGIT (Investigation) Mumbai. In the information received from Investigation Wing, Mumbai it was informed that a search and seizure action was carried out by Investigation wing-Mumbai on Bhanwarlal Jain Group on 03.10.2013, which resulted in collection of evidence that Bhanwarlal Jain, his sons Rajesh and Manish were operating certain benam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. The investigation team also provided the list of beneficiary of such accommodation entry. From the list of purchase provided to the Assessing Officer, the assessing officer identified such 16 bogus entities from which the assessee has shown purchase of Rs. 1,73,49,664/-. On the above observation the assessing officer issued show cause notice as to why the purchased should not be disallowed and added to the income of the assessee. 6. The assessee filed its reply to the said show cause notice dated 05.02.2016. In the reply, the assessee submitted that he has not dealt with Sh. Bhawarlal Jain Group and he don't even known him as far as the transaction of purchases of goods are concerned. The assessee has purchased the goods from the Meridian Gems and Rare Enterprises and he has sold goods to Mohit Enterprises. There is no corroborative evidence to prove that the assessee has taken accommodation entry from such concerns. The copy of the statement of Sh. Bhawarlal Jain is not provided to the assessee. No cross examination of Sh. Bhawarlal Jain is allowed. The assessee stated that the Assessing Officer is merely relying on the report of investigation wing which is third party infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation wing made treated the transaction as bogus and disallowed 25% of aggregate of transaction of Rs. 173,49,664/-. The assessing officer worked out disallowance of Rs. 43,37,416/-. 8. Aggrieved by the addition as well as on reopening under section 147, the assessee filed appeal before CIT(A). Before ld. CIT(A), the assessee reiterated the similar submission on the additions of purchases as made before Assessing Officer. On the validity of reopening, the assessee specifically stated that out of three parties, the assessee made purchases from two parties and sold goods to Mohit Enterprises, therefore, the information to the assessing office was vague. The assessing officer has not disclosed that he obtained permission of Commissioner for reopening. The assessee also requested for cross examination of third party, on the basis of which the additions/disallowance of purchase were made by Assessing Officer. The assessee also relied on certain case laws. 9. The ld. CIT(A) after considering the submission on the validity of reopening held that AO relied on the report of Investigation Wing without furnishing copy of material relied upon to the assessee. The ld.CIT(A) concluded that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f suspicious purposes was upheld in the said case. 12. The ld. CIT(A) after considering the fact that wherein the Gross Profit (G.P) shown by similar cases of more than 5%, the ld. CIT(A) confirmed the addition to the extent of 5%. However in the present case, the assessee has shown GP rate of 0.99% of turnover. Accordingly, the ld. CIT(A) restricted the disallowance to the extent of 12.5% impugned purchase/disputed purchase. Aggrieved by the restricted addition of 12.5%, the assessee has filed present appeal before us. 13. We have heard both the submissions of Learned Authorized Representative (ld. AR) for the assessee and Learned Departmental Representative (ld. CIT-DR) for the Revenue and have gone through the order of lower authorities. Ground No.1 relates to validity of reopening under section 147/148. The Ld. AR for the assessee submits that the AO reopened the case of the assessee on the basis of third party information without making any preliminary investigation. The AO received vague information about providing accommodation entry by Bhanwarlal Jain Group. No specific information about the accommodation entry obtained by assessee was received by AO. There is no live lin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted before investigation wing that he has given such entry to various persons; based on such report the AO has reason to believe that the income of the assessee has escaped assessment and thus the action of AO in reopening is justified. 16.We find that the Hon'ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd Vs DCIT (supra) while considering the validity of similar notice of reopening, which was also issued on the basis of information of investigation wing that they have searched a person who is engaged in providing accommodation entries, held that where after scrutiny assessment the assessing officer received information from the investigation wing that well known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified in re-opening assessment. Further similar view was taken by Hon'ble Jurisdictional High Court in Pushpak Bullion (P) Ltd Vs DCIT (supra). Therefore, respectfully following the order of Hon'ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments Pvt. Ltd. TTANO. 1297 OF 2015 (Bombay High Court) 5 ShilpiJewellers Pvt. Ltd. vs. Union of India &Ors. WRIT PETITION NO. 3540 OF 2018 (Bombay High Court) 6 CIT in Vs. Mohmed Juned Dadani 355 ITR 172 (Gujarat) 7 Micro Inks Pvt. Ltd. Vs. ACIT [2017] 79 taxmann.com 153 (Gujarat) 8 Shakti Karnawat Vs. ITO - 2(3)(8), Surat ITA 1504/Ahd/2017 and 1381 /Ahd/2017 9 Asian Paints Ltd. Vs. DCIT, [2008] 296 ITR 90 (Bombay) 10 PCIT, Surat 1 Vs. Tejua Rohit kumar Kapadia [2018] 94 taxmann.com 325 (SC) 11 The PCIT-17 vs. M/s Mohommad Haji Adam & Co. ITA NO. 1004 OF 2016(Bombay High Court) 12 Pankaj Kanwarlal Jain HUF Vs. ITO 2(3)(8) Surat ITA.No.269/SRT/2017 18. On the other hand, ld. CIT-DR for the revenue supported the order of Assessing Officer. The ld. CIT-DR for revenue submits that investigation wing of the department has made full-fledged investigation during the search action on Bhawarlal Jain and its group. The investigation wing investigated about the beneficiary of accommodation entry provided by Sh. Bhawarlal Jain. The assessee is one of the beneficiary of such purchases/accommodation entry. No stock of any goods/diamonds was found at the premises of Bhawarlal Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X
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