TMI Blog2018 (1) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... This assessee s appeal for assessment year 2006-07, arises against the Commissioner of Income-tax (Appeals)-3, Kolkata s order dated 13.08.2018 passed in case No.1754/CIT(A)-3/C-10(2)/14-15/Kol: involving proceedings u/s. 147 r.w.s. 143(3)/153B(1)(b) of the Income Tax Act, 1961; in short the Act . Heard both the parties. Case file perused. 2. The assessee appear to have raised three substantive grounds in the instant appeal. Its first plea is legal in nature challenging validity of re-opening in question. It then seeks to delete sec. 68 additions of unexplained cash credits amounting to ₹1.25 lac and ₹18 lac representing entries and unexplained share money; respectively. There is no dispute that above latter sum represents enhancement made in the course of lower appellate proceedings in the CIT(A) s order. 3. This assessee is stated to be a company granting loan an advances as well as commission agents etc. It filed its return on 331.03.2009 stating total income of ₹4,528/-. The Assessing Officer framed regular assessment in its case on 31.12.2007 assessing the above stated income of ₹48,234/-. He thereafter termed reasons to believe that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed that on a search in the case of an entry operator, Shri Surendra Kumar Jain group of cases and subsequent further enquiries, it was found that the above referred assessee had obtained a accommodation entry of R.1,25,000/- from the said entry operator group., the assessee had also failed to substantiate that it had not taken any accommodation entry from the said group by providing any proper and cogent evidence/explanation regarding the nature and source of the said fu9nd.however, it is correct that there is no unsecured loan as on 31.03.2016 in the balance sheet of the assessee company. But it is also observed from the audited accounts of the assessee that the assessee had received share application of ₹ 18,00,000/- during the financial year 2005-06 relevant to the assessment year 2006-07. However, the assessee had not allotted any share against the said application money and the same have been shown by the assessee in Schedule -7 of its balance sheet under Current Liability Provisions. It is also evident from the records that the assessee had neither provide any details of the said share application money nor explained the source of the aid fund. In view of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer s reopening reasons itself does not survive in these facts and circumstances. I therefore hold that the Assessing Officer had not correctly assumed the re-opening jurisdiction in absence of any such entry between assessee and the said entry operator. The sole reopening reason is not sustainable in the eyes of law therefore. 7. Both the parties thereafter raised their respective arguments as to whether the latter addition of ₹18 lac share application money could be upheld in these circumstances or not. I find that the co-ordinate bench s order in Sanju K Jalan vs. ITO ITA No.634/Kol/2017 decided on 10.01.2018 has quashed validity of re-opening in case the above based on sole reason wherein stand deleted in appeal proceedings as follows:- 2. The Assessee is an individual. His source of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. It can be seen from the reasons recorded by the AO for initiating proceedings for reassessment that the AO wanted to examine the genuineness of purchase of Diamonds by the assessee during the previous year of the value of ₹ 4,55,472/- from M/s. Nice Diamonds, Mumbai. As far as the question whether purchase of diamond was bogus the assessee had submitted before the AO that the purchases were genuine and furnished documentary evidence like invoice dated 17.03.2012 issued by Nice Diamonds, bank statement maintained with Union Bank of India evidencing payment to Nice Diamonds through cheques dated 27.03.2012 for ₹ 10,02,472/- and cheque dated 3 ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 3 28.03.2012 for ₹ 4,53,000/-. As per the invoice diamonds were sold at Surat. The AO insisted on proof of delivery of diamonds at Surat. The assessee also wanted right of cross examination of Shri Bhawarlal Jain 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case. f. No diamonds were found during the search and seizure operations carried out in the premises of the Bhanwarlal Jain Group, who were alleged to be accommodation entry givers. g. There is no merit in the contention of the assessee that she ought to be provided an opportunity for cross-examination, as the Seller has already denied the transaction. h. Therefore, once the information had been provided by the Ld AO to the assessee, the onus was cast on the assessee to controvert the information, and this has clearly not been done. 9. The other additions of bogus long term capital gain was also confirmed by the CIT(A). Aggrieved by the order of CIT(A), the assessee has preferred the present appeal before the tribunal raising the following grounds of appeal : 1.For that the order 01 the Ld. 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 h 5 ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 5 reasonable belief that any income has escaped assessment and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of hearing. 10. First we will take up for consideration ground no.5 with regard to the addition on account of bogus purchases of diamonds. On the above issue the ld. Counsel for the assessee reiterated the submissions as were made before the revenue authorities. The ld DR relied on the order of the revenue authorities. 11. The undisputed facts of the case are that the assessee purchased jewellery worth ₹ 14,55,472/- from Nice Diamonds, Mumbai on 17.3.2012. The Assessee paid Nice Diamonds the purchase value of the jewellery by two cheques for ₹ 10,02,472 and ₹ 4,53,000 respectively dated 27.3.2012 and 28.3.2012 respectively. In the Balance Sheet as on 31.3.2013 the Assessee has shown the value of the jewellery as addition to his capital. The documentary evidence like bills, invoices, bank statements etc., were furnished by the Assessee and there is no dispute 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 recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows :- Unexplained investments 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the 8 ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 8 value of the investments may be deemed to be the income of the assessee of such financial year. 17. In the present case investments of jewellery is duly reflected in the books of accounts of the assesses. Therefore there is no scope of applying the provision of section 69 of the Act. Apart from the above source of funds is evidenced by the payments from disclosed bank accounts. Therefore the source of investments is also properly and satisfactorily explained by the assesses. In the circumstances, We are of the view 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial interpretation on the making of as 147 assessment in respect of items not referred to in the recorded reasons. However, it does not and cannot override the substantive part of s. 147 that the income for which the notice was issued must be assessable. The learned DR relied on the order of the CIT(A). 19. We have considered the submission of the learned counsel for the Assessee in the light of the judgment of the Hon ble Bombay in the case of Jet Airways (I) Ltd. (Supra). We are of the view that on the facts and in the circumstances of the present case the ratio laid down by the Hon ble Bombay High Court in the case of Jet Airways India Ltd. (supra)is squarely applicable. As we have already seen that the assessment was reopened for the reason that the jewellery purchased by the Assessee was from undisclosed sources and the purchases were bogus. That addition has not been sustained now. The Assessing Officer however, proceeded to make an addition on account of Long Term Capital Gain (LTCG) on sale of shares. This was clearly beyond 10 ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 10 the scope of the proceedings under section 148 of the Act. The Assessing Officer, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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