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2016 (8) TMI 272 - GUJARAT HIGH COURT

2016 (8) TMI 272 - GUJARAT HIGH COURT - TMI - Reopening of assessment - reasons to believe - information provided by DGIT (Investigation) Mumbai - Held that:- Perusal of the reasons recorded show that the information was provided to the Assessing Officer by DGIT (Investigation) 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. .....

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me chargeable to tax had escaped assessment. Such information was not available during the original assessment. Obviously the assessee would not make such disclosures. The requirement for reopening of the assessment even beyond a period of four years are therefore, satisfied. Merely because such information was supplied to the Assessing Officer by the investigation wing of the department would not mean that the Assessing Officer cannot rely upon it after of course, perusing the same and form his .....

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year 2008-2009. 2. Brief facts are as under. Petitioner is a partnership firm and is engaged in 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 ₹ 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 ₹ 9.30 lacs(rounded off). To reopen such assessment, the Asse .....

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ajendra jain group and Shri Surendra jain is managing total 10 concerns/companies. They are some of the entry providers operating in Mumbai, indulging in providing accommodation entries in the nature of bogus sales, and unsecured loans. During the course of search operation u/s 132 of the income Tax Act in the the case of Shri rajendra jain group, Shri Sanjay chandhary group & Shri dharmichand group on 03.10.2013, The managing person of the company Sparsh export Pvt. Ltd. Shri Rajendra jain .....

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nly without any physical stock of goods. In the name of their numerous concerns, they import rough and cut & polished diamonds for other clients who do not want to shows import in their own books. These concerns issue bills/ give accommodation entries for a commission to various parties, who normally purchases diamond in cash from undisclosed parties and need bills to show purchase against sales in their account. These concerns also provides accommodation entries of unsecured loan against ca .....

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The book stock of rough diamonds have been converted by these concerns to cut and polished diamonds through their commission companies or some times these name lending companies/concerns issue bill of rough diamonds to local purchasers and show purchase of polished diamonds from them to square up the transactions. On receipt of such cut and polished diamonds, these concerns, issue sales bills to various parties at the request of the actual importers. The actual importer arranges these sale proc .....

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is used to settle the accounts to whom they have sold the goods through angadia. In these process these name lending concerns receive interest on such loan which they return back in cash after deducting their commission. 3. On going through record it was noticed that assessee had purchased cut & polished diamonds of ₹ 11,99,945/- from the company Sparsh export Pvt. Ltd managed by Shri Rajendra Jain and Shri Surendra Jain and they are entry providers indulging in providing accommodation .....

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ell 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 not have creditworthiness to allow gold in the quantity as loan to the assessee. In absence of creditworthiness of the aforesa .....

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- and the fake purchase transaction amount of ₹ 11,99,945/- have escaped income of the assessee from assessment. l have therefore, reason to believe that income chargeable to tax amounting to ₹ 1,07,00,370/- has escaped assessment and this is a case for reopening the assessment within the meaning of section 147 r.w.s. 148 of the I.T. Act, 1961. Issue notice u/s. 148 of the I.T. Act. 3. Upon receipt of the reasons, the petitioner raised objections under letter dated 2.12.2015. Such ob .....

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o 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. .....

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ed to search operations, during which, their statements were also recorded indicating that they were engaged in bogus billing and providing fake accommodation entries. The Assessing Officer therefore, noted that these persons were mere entry providers. They were indulging in providing accommodation in the nature of bogus sales. In the statements they had also confessed to this aspect stating that they are not really trading in diamonds but indulging in paper transaction only and provide accommod .....

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er noted that as per the information available, aforesaid persons do not have creditworthiness to allow gold in the quantity as loan 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 creditworthi .....

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tiny assessment, the Assessing Officer desired to examine such transactions in context of creditworthiness of these persons, it was always open for him to do so. However, scrutiny assessment cannot be reopened beyond a period of four years without there being anything to suggest that the income chargeable to tax had escaped assessment due to failure on part of the assessee to disclose truly and fully all material facts. Even otherwise, the Assessing Officer had raised multiple queries during the .....

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