TMI Blog2018 (1) TMI 1300X X X X Extracts X X X X X X X X Extracts X X X X ..... income is income under the head salaries, other sources and capital gains. For A.Y.2012-13 the assessee filed return of income on 17.02.2013 showing a total income of ₹ 3,55,512/-. The said return was accepted and an intimation u/s 143(1) of the Income Tax Ac6t, 1961 (Act) was issued. Subsequently the assessment was reopened by a notice issued u/s 148 of the Act dated 27.03.2015 for making a re-assessment u/s 147 of the Act. The reasons recorded by the AO before issuing a notice u/s 148 of the Act reads as follows :- 23/03/2015 It appears from the record that the assessee filed his return of income for the Assessment Year 2012-13 on 17/02/2013 declaring total income at ₹ 3,55,512/-. The return of the assessee was processed on 21/03/2013. Information has been received from DIT (Inv.)-II, Mumbai that the assessee during the financial year 2011-12 had availed of entries of bogus purchases amounting to ₹ 14,55,472/-from a concern M/s. Nice Diamonds of Mumbai. The above information has been received consequent to the search seizure operation conducted in the case of Bhanwarlal Jain group of cases. A search Seizure operation on the above mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n who the revenue claims to have given a confession that they are engaged in providing bogus purchases. Such opportunity of cross examination was not provided and the AO proceeded to rely on the statement recorded by D.I.T. (Investigation),-II, Mumbai. 5. In the course of search of Bhanwarlal Jain the AO was of the view that since investment in diamonds was shown in the balance sheet and the same must have been acquired from some other parties and since the details of such purchases were not furnished the investment should be treated as unexplained and added to the total income of the assessee. The AO accordingly made addition of ₹ 14,55,472/- on account of unexplained purchase from Nice Diamonds. 6. Apart from the above the AO also treated the long term capital gain which were declared by the assessee in the return of income on account of sale of shares as bogus and ultimately determined the total income of the assesee as follows :- Rs. Rs. Returned Income 3,55,512 Add : Purchase from unaccounted source [as discussed] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) is arbitrary, illegal and bad in law. 2. For that the Ld. C.I.T (A) erred in confirming the initiation of proceedings u/s. 147 by the AO who merely relied on the information from DGIT(Inv), Mumbai without applying his own mind when there was no material on record to form a reasonable belief that any income has escaped assessment and the proceedings is bad in law . 3. For that the Ld. CLT(A) erred in confirming the initiation of proceedings u/s. 147 when the AO did not apply his own mind and examined the records of the assessee since the assessee never claimed the sum of ₹ 14,55,472/ - as deduction in any manner while computing the total income and as such there was no escapement of income. 4. For that the Ld. CLT(A) erred in confirming the initiation of proceedings u/s.147 which were bad in law since it was not the case 01 the AO that the purchase was not disclosed in the books or that the payment made 10r such purchase was not explained and thus there was no question of any income or escapement of income. 5. For that the Ld. CI.T (A) erred in confirming the addition of ₹ 14,55,472/- as purchased from unaccounted sources when payment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute on this aspect. 12. The return of income filed by the Assessee for AY 2012-13 was accepted and an intimation was issued u/s.143(1) of the Act. 13. It appears that there was information received by the AO of the Assesse from D.I.T. (Investigation)-II, Mumbai. The information received was that there was a search and seizure operation conducted in the case of Bhawarlal Jain Group of cases on 03.10.2013. Consequent to the said search and investigation conducted, it came to light that Bhawarlal Jain group was providing bogus/accommodation entries to several persons and entities and these entries were bogus entries. Nice Diamonds is one of the entities belonging to Bhawarlal Jain Group of cases. Since the assessee claimed to have made purchases from Nice Diamonds, the assessment in the case the assessee was reopened u/s 147 of the Income Tax Act, 1961 (Act.). 14. In the assessments concluded, the AO after making reference to all the evidences filed by the assessee to prove the source of funds as well as evidence of payments and came to the conclusion that the purchases in question were not genuine. Ultimately the AO made an addition in the case of the Assessee by observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the additions made by the AO and confirmed by CIT(A) cannot be sustained and the same is directed to be deleted. Ground No.5 raised by the assessee is accordingly allowed. 18. The ld. Counsel for the assessee submitted that on the other grounds of appeal vi., Gr.No.6 to 8, it is the plea of the assessee before us that when an assessment is reopened for one reason but no addition is made in the reassessment proceedings in respect of that reason or when the said addition is deleted, then, no further addition can be made in the reassessment proceedings. In this regard ld. Counsel for the assessee placed reliance on the decision of the Hon ble Bombay High Court in the case of CIT vs. Jet Airways India Ltd., 331 ITR 326 (Bom), wherein the Hon ble Bombay High Court held that if AO does not assess income for which reasons were recorded u/s 147 of the Act, he cannot assess other income u/s 147 of the Act. The Hon ble Court observed that (i) S. 147 provides that the AO may assess the income which has escaped assessment and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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