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TMI Blog2016 (8) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing and selling gold and other ornaments. For the assessment year 2008-2009, the petitioner had filed return of income on 9.7.2008 declaring total income of Rs. 88.63 lacs(rounded off). Such return was taken in scrutiny. The Assessing Officer passed order under section 143(3) of the Act on 28.12.2000 and made addition of Rs. 9.30 lacs(rounded off). To reopen such assessment, the Assessing Officer has issued impugned notice in which he had recorded the following reasons : "A search operation u/s 132 of the Income Tax Act in the the case of Shri Rajendra jain group, Shri Sanjay chaudhary group & Shri Dharmichand group was carried out on 3.10.2013. Information is received from A.C.I.T., Central Circle4. Surat vide letter dated 16.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills to show purchase against sales in their account. These concerns also provides accommodation entries of unsecured loan against cash. The modus operandi is that these concerns are merely doing paper transactions instead of carrying out any real business of diamonds trading. They actually do business of maintaining books of accounts only and do not do any actual trading of physical commodity. The actual importer of rough diamonds approaches these concerns to import their diamond through their group of company/concerns and on receipt of the consignment, the real importer gets the delivery of diamond after clearance from CHA. The book stock of rough diamonds have been converted by these concerns to cut and polished diamonds through their co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doing any real trading in diamonds but indulged in paper transaction only and they allow accommodation entries by issuing accommodation bill without affecting any sale to the assessee with modus operandi as discussed. As this is being a fake transaction of paper transaction only for accommodation entries without doing any real trading in diamonds or without effecting any sell to the assesses, the assesse had reduced its income by obtaining fake purchase bill from the above parties 4. lt is seen that the assessee has shown receipts of loan in gold from (i) Shri Ashok Vachhraj Dholakia10.460kg. and (ii) Shri Divyeshkumar Ashokbhai Dholakia 10.833kg. during the year under consideration. As per the information available, the aforesaid persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice for reopening was therefore, without any authority. Counsel submitted that the Assessing Officer had no reason to believe that the income chargeable to tax had escaped assessment. The assessment was framed after detailed scrutiny, partial disallowance on purchase of gold was also made. The Assessing Officer now cannot expand the issue and make further additions 5. On the other hand, learned counsel Shri P.G. Desai for the department opposed the petition contending that the Assessing Officer has recorded proper reasons. The issue as mentioned in the reasons were not examined during the original assessment. Materials came to his notice after the assessment was framed. The assessee had not disclosed truly and fully material facts. Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. In absence of creditworthiness of these persons, he had reason to believe that loan shown in the name of said persons was not genuine. 8. We may refer to second issue first. Though the Assessing Officer has referred to information available to the effect that said Ashok Vachhraj Dholakia and Divyeshkumar Ashokbhai Dholakia did not have creditworthiness to give such quantity of gold as loan, he has not referred to any source of such information. In absence of any material which was not part of the original assessment or with respect to which it can be stated that the assessee failed to disclose true and full facts, it was not permissible for the Assessing Officer to reopen the assessment on this basis. The fact that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai, concerning dubious transactions of Rajendra Jain and Surendra Jain who were managing Sparsh Export Pvt. Ltd. These persons were subjected to search during which they had also made certain confessional statements. The assessee had made purchases of cut and polished diamonds worth Rs. 11.99 lacs from Sparsh Export Pvt. Ltd. On the basis of the information available at the command of the Assessing Officer, he noted that Rajendra Jain and Surendra Jain merely provided accommodation entries without actual sale of diamonds. The assessee had thereby claimed higher expenditure and reduced the profit. It cannot be stated that the Assessing Officer did not have tangible materials to form a belief that the income chargeable to tax had escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X
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