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TMI Blog2018 (4) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) is bad in law. 1.1. That the learned CIT (A), has erred in affirming the jurisdiction of the AO under section 147, and ignoring that there was neither any satisfaction of the AO nor quantification of escaped assessment at the time of recording of reasons as there was no cogent or definite material on record in support of his reasons to believe that certain income has escaped assessment. 1.2. That CIT (A) has failed to appreciate that the AO has solely relied on the vague and scanty report of the Investigation Wing for assuming jurisdiction under section 147 without making any independent enquiry and judicious application of mind The reasons recorded were wrong; without application of mind; and there was no tangible evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which is gross violation of the principle of natural justice. Hence, the addition of Rs. 27,06,075/- on account of purchases made from undisclosed sources is bad in law and liable to be deleted. 5. The appellant craves leave to add, to alter, vary, modify or otherwise amend the grounds before the appeal is heard and finally disposed of." 3. Vide Ground Nos. 1 to 3, the assessee has challenged the validity of the reopening u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act) and vide Ground No. 4, the grievance of the assessee relates to the sustenance of addition of Rs. 27,06,075/-. 4. Facts of the case in brief are that the AO received the information from the Investigation Wing of the department that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. However, the AO did not find merit in the objections of the assessee. 5. During the course of assessment proceedings, the AO asked the assessee to justify the genuineness of the purchases from the aforesaid parties. In response, the assessee furnished copies of the original bills and stated that the payments were made to them through banking channels. The assessee also furnished the copy of sales bills to prove that transactions were genuine as the goods have been purchased and sold. It was submitted that the payments were made through banking channels and the assessee received the sales consideration through banking channels. The assessee also furnished copies of stock register, sales tax/VAT return, details of labour charges paid for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operandi of bogus transaction, been undertaken through his concerns. The concerns were directly or indirectly controlled by Sh. Rajendra S. Jain. During the previous year under consideration the appellant claimed to have purchased polished diamond of Rs. 27,06,075/- from M/s Vitrag Jewels and M/s AVI Exports. The appellant during the assessment proceedings, to prove the genuineness of the transaction has submitted the sale bill, ledger account, bank statement, stock register, copy of return filed with the VAT Department and copy of acknowledgement of return filed by the seller. It is pertinent to mention here that the statements of Sh. Rajendra S. Jain and Mudit P. Karnawat have established categorically that none of the concerns had the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the appellant that the Assessing Officer has merely relied on the statement of Sh. Rajendra S. Jain and Mudit P. Karnawat has to be looked into in right perspective as Sh Rajendra S. Jain and Mudit P, Karnawat are not strangers or third party. Both these gentlemen are proprietor of M/s Vitrag Jewels and M/s AVI Exports, the concerns with which the appellant has claimed to have entered into a transaction of purchase of diamonds. They were the one who were responsible for day to day affairs of the firms. Their statement is an important piece of evidence which the Assessing Officer used. Coming on to the opportunity to the assessee to cross examine Sh. Rajendra S. Jain and Mudit P. Karnawat, an opportunity was provided by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Jain. The assessee to prove the genuineness of the transactions, furnished the copies of purchase bills, sales bills, stock register and bank statements. In the instant case, the AO also issued the notice u/s 133(6) of the Act, in response the proprietors of the aforesaid firms furnished the confirmations alongwith copies of their ITR, bank statements. The assessee furnished copies of returns of the said parties, their PAN numbers, relevant bank accounts, copy of invoices, sales tax registration number etc. This fact has been admitted by the AO at page no. 8 of the assessment order dated 27.03.2015. In the present case, the assessee made the entry of the purchases in the stock register and also furnished the copies of sales bills to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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