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TMI Blog2022 (7) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... essee succeeds on this legal ground, we refrain from adjudicating the issues on merit. - Decided in favour of assessee. - ITA No. 1167/Del/2019 - - - Dated:- 21-7-2022 - Shri Anil Chaturvedi, Accountant Member And Ms. Astha Chandra, Judicial Member For the Assessee : Ms. Lalitha Krishnamurthy, CA For the Department : Shri Rajinder Jha, Sr. DR ORDER PER ASTHA CHANDRA The appeal by the assessee arises out of the order dated 06.11.2018 of the Ld. Commissioner of Income Tax (Appeals)- 11, New Delhi ( CIT(A) ) pertaining to the assessment year ( AY ) 2010-11. 2. The assessee is an individual. He is proprietor of M/s. Jewel of India. He filed his return for AY 2010-11 on 30.09.2010 declaring loss of Rs. 5,55,164/-. On the basis of information received from the Investigation Wing that the assessee has accepted accommodation entry, the Ld. Assessing Officer ( AO ) re-opened the case of the assessee under section 147 of the Income Tax Act, 1961 (the Act ) after recording reasons. 3. Accordingly, notice under section 148 of the Act was issued to the assessee on 29.03.2017. In response thereto, the assessee submitted vide letter dated 15.04.2017 that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of the assesee, the addition of Rs. 33,09,470/- made under Section 68 of the Act on account of bogus purchases and sustained by Ld. CIT (Appeals) is unjust, unwarranted and not tenable on facts and in law. 5. That as the diamonds were purchased from Mayank Impex was intended for being utilized /sold to customers against sale bills of the assessee and payment by such customers and on sale such sale proceeds, are offered to tax and is verifiable from the records of the assessee, disallowance of Rs.33,09,470/- made under Section 68 of the Act on account of bogus purchases by taking the sale proceeds at 100 percent would give a distorted picture of the profits of the assessee and consequently order of Id. CIT(Appeals) as sustained is not tenable on facts and in law 6. That as Mayank Impex had not specified the name of the assessee and transaction with the assessee in their statement on oath, the addition of Rs.33,09,470/- made under Section 68 of the Act on account of bogus purchases in the hands of the assessee and sustained by Id. CIT(Appeals) is arbitrary, unjust and unwarranted on facts and in law. 7. That based on such general statement the AO without verify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from the Investigation Wing. 6.1 Regarding the difference of Rs. 33,34,050/- between closing balance of capital account as on 31.03.2009 and opening balance as on 01.04.2009 the Ld. AR submitted that the difference arose because the return for AY 2009- 10 was revised by the same amount. Reason for revising the return was explained to the Ld. AO in assessment proceedings by way of filing reconciliation sheets (copy at pages 69-70 of Paper Book) which was accepted by the Ld. AO. The Ld. AR drew our attention to the assessment order for AY 2009-10 (copy at page 71-73 of Paper Book) wherein the Ld. AO accepted the reason for revising the return by stating that the quantity and rate was wrongly applied while computing the value of closing stock of shares. The Ld. AR submitted that when the revised return is accepted by the Ld. AO the opening balance of capital account would come down by the same amount. Thus, the difference referred to by the Ld. AO stands reconcile. 6.2 The Ld. AR submitted that under identical facts and circumstances the Tribunal in the assessee s own case for AY 2011-12 held the assessment proceedings to be invalid where such reopening was made on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. I have also considered the various decisions cited before me. A perusal of the reasons recorded for reopening the assessment, copy of which is ITA No.4534/Del/2017 placed at page 15 of the Paper Book, shows that the following reasons were recorded for reopening of the assessment :- Reasons for reopening the case u/s 147/148 of the I.T. Act, 1961 For A.Y. 2008-09. The Addl. Commissioner of Income Tax, Central Range, Surat vide letter no.SRT/Addl.CIT/CR/Rajendra Jain, Dharmichand Jain, Sanjay Choudhary Gr./2014-15/506 dated 13/03/2015 has informed that a search and seizure operation u/s 132 of the I.T. Act 1961 in the case of Sh. Rajendra Jain, Sh. Sanjay Choudhary and Sh. Dharmichand Jain Group was carried out on 03/10/2013 by the DGIT (Inv.), Mumbai Charge. During investigation it was found that Sh. Rajendra Jain, Sh. Sanjay Choudhary and Sh. Dharmichand Jain were some of the entry providers operating in Mumbai, indulging in providing accommodation entries in the nature of bogus sales and unsecured loans. During investigation it was also revealed that besides above lender group, some other entry providers were also engaged in providing accommodation entry. As per inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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