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2017 (6) TMI 1305 - AT - Income TaxReopening of assessment - whether AO has rightly reopened the assessment by issuing notice under Section 148? - bogus purchase of diamonds - HELD THAT:- After processing u/s 143(1) of the Act, the Assessing Officer received a report from the Deputy Director of Income Tax (Investigation)-II, Mumbai regarding bogus purchase of diamonds from M/s Daksh Diamonds, Mumbai. Therefore, the report received from Deputy Director of Income Tax (Investigation)- II, Mumbai was the basis for reopening of assessment. Hence, it cannot be said that the reopening was made on the basis of the material already existed on record. This Tribunal is of the considered opinion that when the Assessing Officer received information with regard to bogus purchase of diamonds from M/s Daksh Diamonds, she rightly reopened the assessment by issuing notice under Section 148 therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Bogus purchase of diamonds - information provided by the Deputy Director of Income Tax (Investigation)-II, Mumbai was proved beyond doubt. When the assessee claims that the diamonds were purchased and produced the ledger and the details of payment made to M/s Daksh Diamonds, it is obligation on the part of the AO to examine the necessity of the assessee to make payment through banking channel. Merely because M/s Daksh Diamonds has not responded to the letters issued by the Assessing Officer under Section 133(6) of the Act, that would not create any doubt in the mind of the Assessing Officer that the information received from Deputy Director of Income Tax (Investigation)-II, Mumbai would be proved. The Income-tax Act confers ample power and authority on the AO to enforce the attendance of M/s Daksh Diamonds and call for records from them to verify the transaction made by the assessee. The Assessing Officer is not expected to leave the matter as such merely because M/s Daksh Diamonds has not responded to her letters issued under Section 133(6) of the Act. If the Assessing Officer did not want to proceed after issuing letters under Section 133(6) of the Act, the assessee cannot be penalized on presumption. The matter would stand differently in case the Assessing Officer proceeds further after issuing notice under Section 133(6) of the Act, and establish that the assessee has not purchased any diamond from M/s Daksh Diamonds. In this case, the Assessing Officer has not taken any further step after issuing the notice under Section 133(6) - This Tribunal is of the considered opinion that there cannot be any disallowance / addition on the basis of presumption that the information received by the AO was established beyond reasonable doubt. Therefore, this Tribunal is unable to uphold the orders of the authorities below. Accordingly, the orders of both the authorities below are set aside and the addition is deleted. - Decided in favour of assessee.
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